Credit advisor warns Buy Now, Pay Later alcohol sales need more protection

By Jemima Huston of RNZ

• Buy Now, Pay Later providers are targeting alcohol merchants due to sector deregulation and the weak economy.
• Meurig Chapman from Happy Prime warns that lack of regulation increases harm for users.
• Chapman is calling for Buy Now, Pay Later to be regulated like other credit forms to protect consumers.

Buy Now, Pay Later providers are targeting alcohol merchants and products because of sector deregulation and the weak economy, a credit risk adviser says.

Last month the Government removed some consumer protections to allow Buy Now, Pay Later (BNPL) schemes to set late or default fees as they see fit.

The Government argued market competition and the Fair Trading Act was enough to prevent providers exploiting consumers.

But credit risk advisory firm Happy Prime chief executive Meurig Chapman said without ethical and responsible lending guidance, these schemes have free rein on the market.

He said this was increasing harm for people using BNPL to survive the economic downturn.

“Over the last year, increasingly, providers of buy now, pay later services have been targeting merchants such as off-licences with buy now, pay later product ... and I think it’s increasingly started to materialise with the challenges we’re having in the economy around the struggle of consumers to pay for everyday transactions.

“I think that buy now, pay later providers are seeing an opportunity to provide their services.”

A search for “alcohol” on the Afterpay New Zealand website returns 100 results, including liquor stores, alcohol brands and gift box shops, while Zip has three results.

Chapman said BNPL needed to be regulated the same way as other forms of credit, to protect consumers.

“Excluding buy now pay later from the CCCFA [the Credit Contracts and Consumer Finance Act] allows them to have looser assessment criteria for offering those services to customers, and the unintended consequence of that could be that they would be in and do hardship.

“Increasingly we’re start to see more and more people using buy now pay later, and they’re missing their repayments and are subject to fees from those providers.”

RNZ contacted Afterpay, Zip and the Ministry of Business, Innovation and Employment for comment.

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