Buy Now Pay Later: Multiple Accounts and the Credit System in Australia

35 Pages Posted: 23 Sep 2022 Last revised: 18 Oct 2022

See all articles by Elizabeth Boshoff

Elizabeth Boshoff

Independent

David Grafton

University of Sydney Business School

Andrew R. Grant

University of Sydney Business School - Discipline of Finance; Financial Research Network (FIRN)

John Watkins

University of Sydney Business School

Date Written: October 15, 2022

Abstract

We analyse transactions data of four buy now pay later (BNPL) platforms on credit cards and debit cards at a major Australian financial institution over the period from January to December 2021, finding that approximately 40% of BNPL users operate more than one BNPL account. Relative to consumers with a single BNPL account, the average multiple BNPL account holder is more likely to be from a lower socioeconomic area, more likely to be receiving government benefits, has a higher credit card utilisation rate, and uses more personal loans. Multiple BNPL users thus likely represent higher credit risk for financial institutions, including BNPL platforms. However, as BNPL is not regulated as credit, the risk such customers pose is not completely visible to market participants.

Keywords: consumer credit, buy now pay later, credit bureau

JEL Classification: D12, G21

Suggested Citation

Boshoff, Elizabeth and Grafton, David and Grant, Andrew R. and Watkins, John, Buy Now Pay Later: Multiple Accounts and the Credit System in Australia (October 15, 2022). Available at SSRN: https://ssrn.com/abstract=4216008 or http://dx.doi.org/10.2139/ssrn.4216008

Elizabeth Boshoff

Independent

David Grafton

University of Sydney Business School

Andrew R. Grant (Contact Author)

University of Sydney Business School - Discipline of Finance ( email )

H69 Codrington Business School Building
Sydney, NSW 2006
Australia
61-2-9036-6238 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

John Watkins

University of Sydney Business School

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