What is Buy-Now, Pay-Later
BNPL is a relatively new, innovative and fast growing credit alternative in New Zealand, and is particularly popular for online purchases. Afterpay, Humm, Zip, Laybuy, Genoapay (Latitude), Openpay and, Klarna are examples of BNPL in New Zealand. By using BNPL, people can get access to goods or services now but pay for them later in a series of instalments.
Concerns of financial hardship
Financial mentoring organisations who work to help New Zealanders in financial difficulty have made MBIE aware that BNPL could be creating financial hardship for some consumers.
While BNPL products have features of consumer credit contracts, they fall outside the strict definition in the CCCFA (section 11) because they do not charge interest, fees or take a security interest over goods. They are subject to the Fair Trading Act 1986, and some BNPL providers offer other products which are CCCFA regulated.
CCCFA (section 11)(external link) — New Zealand Legislation website
During the MBIE 2018 Review of Consumer Credit, there was found to be little evidence of harm caused by BNPL products at that time and therefore they were not brought within the scope of the CCCFA. Through that review the Government created a new power under the CCCFA to extend legal requirements to BNPL and other non-regulated credit products if warranted.
Review of consumer credit law
New power to extend legal requirements to BNPL and other non-regulated credit products(external link) — New Zealand Legislation website