The role of Buy Now Pay Later services in enhancing competition in the Australian economy - The Australia Institute

This paper argues that such an approach would be anticompetitive, stifle innovation in the finance sector, and increase costs for consumers. Such an approach would likely result in customers being encouraged to switch to other products, such as credit cards, which may have lower point of sale merchant fees but also have higher trailing fees and higher overall costs to consumers.

In addition to this potential for direct harm to consumers, by singling out BNPL customer acquisition services, as opposed to those offered by companies like Google and Facebook, for point-of-sale cost disclosure, attempts to treat BNPL fees as ‘transaction fees’ would serve to entrench the market dominance of existing search engine and social media platforms in the customer acquisition market.

Likewise, while BNPL services have proved very popular to younger consumers who do not want to hold credit cards and pay high interest rates, but do need to smooth payments for lumpy transactions, creating an obligation on BNPL services to disclose their customer acquisition plus payment instalment service fees at point of sale would also impede the ability of BNPL platforms to continue to erode the market share of high interest credit card issuers.

/r/ASX_BNPL Thread Link - australiainstitute.org.au