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

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