AfterPay, zipPay in ASIC crosshairs 

— 1 minute read

ASIC has found that ‘buy now, pay later’ arrangements are influencing the spending habits of younger consumers.

A buy now pay later arrangement allows consumers to purchase and obtain goods and services immediately but pay for that purchase over time. While some buy now pay later providers offer fixed term contracts up to 56 days for amounts up to $2,000, other providers offer a line of credit for amounts up to $30,000.

ASIC this week released a report into the industry, which found that the number of consumers who have used ‘buy now, pay later’ has increased five-fold from 400,000 to 2 million over the financial years 2015–16 to 2017–18. 


The number of transactions has increased from about 50,000 during the month of April 2016 to 1.9 million in June 2018. At 30 June 2018, there was $903 million in outstanding buy now pay later balances.

“Although our review found many consumers enjoy using ‘buy now, pay later’ arrangements and plan to continue using them, there are some potential risks for consumers in using these products,” ASIC commissioner Danielle Press said.

“The typical ‘buy now, pay later’ consumer is young, with 60 per cent of ‘buy now, pay later’ users aged between 18 to 34 years old. We found that ‘buy now, pay later’ arrangements can cause some consumers to become financially overcommitted and liable to paying late fees.”

ASIC’s report found that one in six users had either become overdrawn, delayed bill payments or borrowed additional money because of a ‘buy now, pay later’ arrangement. Most consumers believe that these arrangements allow them to buy more expensive items than they would otherwise and spend more than they normally would. Providers also use behavioural techniques that can influence consumers to make a purchase without careful consideration of the costs.

“The exponential growth in this industry, along with the risks we have identified, means this will remain an area of ongoing focus for ASIC. One area we will be targeting is where consumers are paying more than they need to for using a ‘buy now, pay later’ arrangement,” said Ms Press.

ASIC undertook a proactive review of these arrangements to develop a broad understanding of this growing industry and to identify potential risks for consumers. 

The review examined six providers, four of which are part of larger ASX-listed companies. The buy now pay later arrangements reviewed were: Afterpay, zipPay, Certegy Ezi-Pay, Oxipay, BrightePay and Openpay.


AfterPay, zipPay in ASIC crosshairs 
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James Mitchell

James Mitchell

James Mitchell is the editor of the Wealth and Wellness suite of platforms at Momentum Media including Investor Daily, ifa, Fintech Business, Adviser Innovation and Wellness Daily.

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