(Corrects currency to Australian dollars in paragraph 6)
Nov 16 (Reuters) - Australia’s corporate watchdog said on Monday that one in five consumers engaged in buy-now-pay-later (BNPL) transactions were missing payments and some were facing financial hardship, as part of a wider report published on the booming industry.
Some consumers who use BNPL arrangements were cutting back on or going without essentials, or taking out additional loans to make their BNPL payments on time, the Australian Securities and Investments Commission (ASIC) said it found in its research.
Australian BNPL firms, including heavyweight Afterpay Ltd , have benefited from a shift to online shopping during the coronavirus crisis in countries including the United States, where state aid has also boosted retail sales.
The boom in the industry has also led to increasing scrutiny in the so far largely unregulated sector.
ASIC’s latest report follows an earlier one released in November 2018, looking into potential implications for regulation of the sector.
During 2018–19, missed payment fee revenue for all BNPL providers in the review was over A$43 million ($31.35 million), up 38% from the previous financial year, while the number of BNPL transactions nearly doubled to 32 million in 2018-19 from 16.8 million in 2017-18, ASIC said.
“Buy now pay later arrangements are clearly popular as a payment method. While working for the majority of users, some consumers are suffering harm”, ASIC added.
The regulator said changes were on the horizon that would impact the industry, with design and distribution obligations coming into effect in October next year.
Afterpay and smaller peer Zip Co Ltd said in separate statements they welcomed the report, with Afterpay adding it would participate in the Australian government’s upcoming review of the regulatory architecture of the payments system. ($1 = 1.3716 Australian dollars) (Reporting by Shruti Sonal in Bengaluru; Editing by Lincoln Feast)