PayPal has lent its support to Australia’s planned buy now, pay later (BNPL) regulations.
In a letter released Thursday (Feb. 16) as part of a government inquiry into the BNPL industry, the payments firm said it was in favor of a “tailored, proportionate and thoughtful regulatory framework” for the industry.
PayPal also argues that while it favors self-regulation, the company believes “it is more appropriate for both consumer and industry certainty and competitive neutrality that the minimum expected standards are contained within formal regulation.”
The payments giant launched its BNPL service three years ago and last week reported substantial growth in that side of its business, extending 200 million loans to more than 30 million consumers.
Australia’s treasury has said it wants BNPL regulations in place this year. In the summer of 2022, Financial Service Minister Stephen Jones said the government would move forward with plans to bring BNPL under credit laws. The current law exempts BNPL providers from rules that protect borrowers using credit cards or personal loans.
“Products like Zip and Afterpay, I think they’re a good innovation in the credit market,” Jones said. “Can we stop having an argument about whether [they’re] credit or not? It really is a dead-end street. Let’s start working on regulating [them] within the credit space. We welcome the fact that they’ve introduced a code, [and will] move to legislate it and fill any gaps.”
Regulations for the industry have been backed by the Australian Securities and Investments Commission, which — as Reuters noted — also called for the BNPL market to be governed by consumer protection law as “credit products with similar characteristics and the same purpose and function should be treated the same way.”
Australia’s move toward tougher regulation followed news from earlier this week that the U.K. had begun an eight-week consultation aimed at regulating the BNPL industry.
The British government has long spoken of a wish to tighten the rules around installment payment companies and bring them under the Financial Conduct Authority (FCA) scope.
As PYMNTS reported Wednesday, the proposed regulations follow years of exponential BNPL growth in the U.K., with data from the FCA showing that the use of the product nearly quadrupled to hit £2.7 billion (about $3.2 billion) in transactions in 2020.
And in the years since, unregulated BNPL loans have grown in popularity as consumers turn to installment payments to avoid racking up credit card debt.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More