Buy Now Pain Later: The Experience of Victorian Consumers with Buy Now, Pay Later loans

Summary

Examining the impact of Buy now, pay later (BNPL) loans on Victorians during 2022, highlighting which groups were more likely to be using BNPL products, payment difficulties with BNPL products, and incidence of poor financial wellbeing of BNPL users. We found:

• Three quarters of BNPL users had more than one BNPL loan concurrently in the last 6 months, 7% reported they took out more than 10 BNPL loans concurrently in the last 6 months
• Among those who took out a BNPL loan in the last 6 months, approximately one in five sought payment assistance (20%) or had to miss a repayment (18%)
• BNPL usage is high among those with no savings buffers: 62% of those taking out a BNPL loan couldn’t raise more than $2000 in an emergency, 30% reported they couldn’t raise $500
• 22% of those using BNPL products went without a meal in the last 6 months to due costs

Our research demonstrates a clear need to regulate BNPL providers like other forms of regulated credit. BNPL now rivals established and regulated forms of credit as a driver of payment difficulty – and so requires effective regulatory oversight rather than self-regulation.