👉 Background: Buy now pay later is the payment method that lets you buy something immediately, but pay for it overtime in instalments - usually without any interest. Over the past 7 years, it has grown to over 7 million active BNPL accounts in Australia.

👉 What happened: After years of do-we-don't-we regulate the industry, new regulation has been announced. BNPL's like Afterpay + Zip will officially be classified as credit products. It means that BNPL companies will be regulated under existing credit laws - so they will need to:

• Have a credit licence to issue credit products
• Perform credit checks on customers
• Determine that products are suitable for their users under responsible lending obligations

👉 What else: This regulation comes after worries of the dangers that BNPL pose to consumers... especially vulnerable consumers.

What's the key learning?

💡While BNPL's have created riches for many investors, there's been an invisible cost that has been disproportionately impacting vulnerable borrowers.

💡ASIC found that 19% of BNPL consumers showed two or more indicators of financial stress such as cutting back on essential purchases or missing other bill payments.

💡Until now, BNPL's haven't had the same level of regulation as other credit products. But now, the government's new regulation is hoping to reduce the harm that some vulnerable people are facing due to BNPL products.

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