Commonwealth Bank boss Matt Comyn expects scrutiny and regulatory concerns to increase for buy now, pay later providers, despite authorities declining to impose conditions on the credit providers.
Comyn on January 28 remained convinced that the likes of Afterpay and Zip, which tend to charge late payment fees rather than interest, will eventually face tighter controls.
“I don’t think the focus and scrutiny is going to go away,” Comyn said in response to a question at a technology briefing.
“If anything, it is going to increase, but I think there will be clearly divergent views for some time about the need for regulation and when that will most likely come into effect.”
Buy now, pay later providers are popular among young people, many of whom have preferred them to bank credit cards.
The Australian Securities and Investments Commission last year found purchases using the new wave of services climbed 90 percent in 12 months. One in five users missed payments, which usually results in being charged a fee.
Yet the regulator opted not to impose additional rules.
Comyn said regulators and policy makers wanted to ensure innovation in financial services, so regulation tended to lag in emerging areas.
“I think the same sorts of issues are being contemplated internationally by many other countries,” he said.
The buy now, pay later sector has devised a code of conduct which promotes responsible lending, which will be adopted from March.
CBA last year bought a stake in buy now, pay later provider Klarna, developed in Sweden.
Klarna’s Australia and New Zealand boss Fran Ereira said there were 575,000 users in Australia and 400 businesses accepting payments.
Meanwhile the bank’s technology venture arm, x15, said it bought a software business catering to cafes and restaurants called Doshii.
Steven Deare in Sydney