Will Buy Now Pay Later (BNPL) face the same demise as peer-to-peer lending? We think there’s a pretty good chance if regulators don’t move quickly to strike a balance between innovation and responsible lending practices.
There’s no argument that BNPL has transformed the way people finance purchases. Retail, hospitality, and professional services have seen widespread adoption. It’s innovative and can be a valuable financial tool, but only when it’s regulated properly. New Zealand’s regulatory framework remains largely behind the curve, despite various working groups and consultations. The availability of BNPL credit services in alcohol sales not only raises ethical questions but the possibility of a knee-jerk response from regulators. We’ve seen this play out before with peer-to-peer lending where regulator inaction allowed the product to develop with considerable time, effort and investment, only for them to stomp it out. BNPL faces the same outcome if regulators don’t move quickly. Here at Happy Prime, we think BNPL needs to be brought under the same regulatory umbrella as other forms of credit. That doesn’t mean stifling innovation, but it does mean making sure there are adequate protections in place for consumers.
Happy Prime's Meurig Chapman spoke to Jemima Huston from Radio New Zealand about the potential impact of the government’s move to remove some of the customer protections to allow BNPL schemes to set late or default fees as they see fit.
Read the article here.
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