Payment Guide: ASIC Publishes Buy Now Pay Later Industry 2020 Report

The retail payments market is continually changing with increased innovation and competition and developments in technology. Buy Now Pay Later (BNPL) is a relatively new, instalments-based payments method, typically used to make discretionary purchases–both in-store and online.

Australian Securities and Investments Commission (ASIC) recently has published a new report on the buy now pay later industry, focusing on the growth of the industry, the impact on consumers and the regulatory developments. Its data base is from Afterpay Australia Pty Ltd​ (Afterpay) and other five payment providers.

The growth and evolution of the buy now pay later industry

Data from the 2019 survey by the Reserve Bank of Australia (Reserve Bank) of consumer payment behaviour shows that consumers are continuing to shift away from paper-based forms of payment such as cash and cheques. There have been developments in contactless payments technology.

New financial services firms have emerged in payments technologies and gateways, with global companies not traditionally aligned to financial services also launching payments products.

The following three figures show the rapid development of the buy now pay later industry.

• Number of active accounts

  
  

• Number and value of transactions 

  
  

• Continued growth into 2020

  
  

The impact of buy now pay later arrangements on consumers

Competition from the growing buy now pay later industry provides consumers with increased choice and access to payments and credit options with unique features and benefits.

ASIC’s research shows that one in five consumers are missing payments. In the 2018–19 financial year, missed payment fee revenue for all buy now pay later providers in the review totalled over $43 million, a growth of 38% compared to the previous financial year.

Buy now pay later arrangements are clearly popular as a payment method. While working for the majority of users, some consumers are suffering harm.

Fortunately, “there are regulatory changes coming that will impact the industry, with the design and distribution obligations coming into effect in October 2021” the official statement cites.

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