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Debt burden: 90% Of BNPL users have other loans too

BNPL is a recent credit solution that has seen increasing popularity in New Zealand. It is attractive to consumers because it allows them to make purchases without needing to pay in full upfront, instead enabling them to spread the cost over a set period of time.

However, despite its popularity, some concerns have been raised about users potentially falling into financial difficulty when using BNPL services. According to MoneyTransfers.com, 90 percent of BNPL users in New Zealand also have other loans on top of their BNPL usage. This suggests that many consumers are using it as a way to supplement their existing loan portfolios and potentially increase their debt burden.

According to MoneyTransfers CEO Jonathan Merry,


This should be a wake-up call for policymakers to look at how BNPL services are being used and the dangers they could pose to vulnerable consumers.” He goes on to suggest that more education is needed around the potential risks of using these services when borrowing money and that there need to be better safeguards in place for those who may be vulnerable to debt.

MoneyTransfers CEO Jonathan Merry



Other countries, such as Australia, have already taken steps to regulate the BNPL industry and provide consumers with more protection.

New Regulations

Currently, BNPL providers in New Zealand aren’t obligated to adhere to the guidelines set by the Credit Contracts and Consumer Finance Act (CCCFA). The main reason is that they neither charge interest nor take a security interest over goods. Although BNPL products are subject to the Fair Trading Act 1986, some lenders offer other services which do fall under CCCFA regulation–such as credit cards. This means there is a lack of uniformity and consistency in consumer protection.

However, the Government has recently agreed to apply the CCCFA to BNPL providers, so consumers using this form of credit will receive many of the same protections as borrowers in other consumer credit contracts – like credit cards and personal loans. Obligations under the CCCFA are intended to be applied proportionately to allow the benefits of BNPL to be retained.

CCCFA expects BNPL providers to abide by key protections and responsibilities, such as assisting borrowers in making informed decisions and treating them reasonably and ethically.

This move provides greater transparency and assurance around using BNPL services in New Zealand.

Issues Relating to Financial Hardship

Consumers must remain vigilant when using BNPL services, as they may be susceptible to debt if they don’t use them responsibly. Understanding the potential risks of using such services and familiarising oneself with the applicable consumer protections is vital to ensure financial well-being.

By implementing the CCCFA, BNPL providers will be held to a higher standard, and consumers can rest assured that the law adequately protects them. The move is important in ensuring greater consumer protection for those using BNPL services in New Zealand.


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