Afterpay has announced it will be introducing a spend cap feature set to launch later in 2024.
The Buy Now, Pay Later service announced the new feature to its customers via email on Tuesday morning.
‘This feature is launching later in 2024. When it’s available it will allow you to set a cap on what you can spend with Afterpay with a few simple taps in the app.’
Afterpay users can set up an account without undergoing an external credit check, and using the platform does not impact their credit score.
Initially, customers are given a $600 borrowing limit, which may rise as they continue using the service
‘The longer you have been a responsible shopper with Afterpay — making all payments on time — the more likely the amount you can spend will increase,’ its website states.
Meanwhile, the Australian government is set to crack down on buy now, pay later services with new legislation being introduced in parliament.
The government says BNPL providers have not been adequately regulated by Australian consumer credit laws, meaning the businesses are not subject to complete affordability checks like those essential for credit cards and other loans.
The Australian Securities and Investment Commission has said that while the lending arrangements can be beneficial, ‘it is aware some consumers are incurring missed payment fees and report being financially stressed.’
The Responsible Buy Now Pay Later and Other Measures Bill was tabled by assistant treasurer Stephen Jones on Wednesday.
‘Our approach to better regulating BNPL strikes an appropriate balance between preserving the benefits of access to low cost credit and addressing the risks of consumer harm,’ Mr Jones said.
Fee caps for the credit lender users will be finalised with the implementation of the regulations.
‘This legislation regulates BNPL in a proportionate way that provides necessary consumer protections while maintaining the essential benefits,’ Mr Jones said.
‘This will not change the underlying obligation not to provide credit unless it’s affordable and meets the consumer’s needs.’
According to recent research from Finder, as of March this year, a whopping 20 per cent of BNPL users have paid a late fee – up from just five per cent in 2020.
Graham Cooke, head of consumer research at Finder, warned Australians should be informed about the risks of products like Afterpay and not use them frequently.
‘Responsible use of BNPL services requires careful budgeting – users should avoid relying on it for everyday expenses,’ he said.
‘While it offers convenience, it’s not risk-free. Overspending, late fees, and potential debt accumulation are risks.’
