Afterpay has announced that it will be introducing a spending limit feature that will be launched in late 2024.
The Buy Now, Pay Later service announced the new feature to its customers via email Tuesday morning.
‘This feature will be launched later in 2024. When available, it will allow you to set a limit on what you can spend with Afterpay with a few simple taps in the app.’
Afterpay users can create an account without undergoing an external credit check, and using the platform does not affect their credit score.
Initially, customers are given a borrowing limit of $600, which can increase as they continue to use the service.
“The longer you are a responsible shopper with Afterpay (making all payments on time), the more likely you are to increase the amount you can spend,” 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 under Australian consumer credit laws, meaning the companies are not subject to comprehensive affordability checks like those essential for credit cards and other loans.
The Australian Securities and Investments Commission has said that while loan agreements can be beneficial, it is “aware that some consumers are incurring late payment charges and reporting being financially stressed.”
The “Buy Now, Pay Later and Other Responsible Measures” bill was introduced Wednesday by Deputy Treasurer Stephen Jones.
“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,” Jones said.
The rate caps for credit lending 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 essential benefits,” Jones said.
“This will not change the underlying obligation not to provide credit unless it is affordable and meets consumer needs.”
According to recent research from Finder, as of March this year, a whopping 20 percent of BNPL users paid a late payment fee, up from just five percent in 2020.
Graham Cooke, head of consumer research at Finder, warned that Australians should be aware of the risks of products like Afterpay and not use them frequently.
“Responsible use of BNPL services requires careful budgeting – users should avoid relying on them for their everyday expenses,” he said.
“While it offers convenience, it is not risk-free. Overspending, late fees and potential debt accumulation are all risks.”
Afterpay today announced that it will be introducing a spending limit feature that will be launched later in 2024
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