BNPL: Unbridled Convenience or The Wild West of Retail?

BNPL is a service in which customers can purchase a product by paying the cost over an extended period of time as opposed to paying the full amount upfront.

• The BNPL sector is a fast-emerging sector in the market, but it also presents challenges for policy makers.

• While the BNPL industry currently remains unregulated, this is likely to change in the future as Australian consumers increasingly complain of heavy late fees.

• The unregulated nature of BNPL has meant that the industry has achieved unhindered growth over the past three years.

• While BNPL previously only targeted online shoppers, it has become increasingly available in stores. When at the checkout at a participating store, a customer simply needs to request BNPL as a payment option. In some cases, this will automatically be suggested as a payment option without the customer having to request anything.

• Although BNPL can offer a solution to paying a large sum of money for a product, it’s not without its perils.

• Merchants are charged a transaction fee if they wish to accept BNPL. However, for merchants, having BNPL as an option can increase sales. When a merchant makes a sale using BNPL, the BNPL firm will pay the full amount for the product, so the firm is owed the payments rather than the business.

• BNPL companies don’t make money on interest like credit card companies do. Instead, they take a cut of the product they are helping the consumer purchase.

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