👉Background: Afterpay, Zip and many other buy now pay later companies took the world by storm over the COVID period. Not only did their share price skyrocket.. But also the number of users on their platforms.

👉 What happened: Afterpay had 5.7m global users at the end of 2019 and over 16m users globally by August 2021. But now, the Department of Treasury is considering whether credit checks should be required for ALL customers using buy now pay later services.

👉 What else: This could seriously hurt their ability to issue buy now pay later products. It’s believed this could be enforced in the first half of the 2023 year.

What's the key learning?

💡With more mindshare comes more attention. While more attention from customers is good for business, more attention from regulators can often means more business challenges.

💡 Many believe that Afterpay has been operating on the fringes of regulation for a while now. Here's the thing: Afterpay and some other BNPL providers don’t charge customers interest on their loans, so they have never been considered a credit product.

💡And because Afterpay is not technically a credit product, the company hasn’t been required to do formal credit checks. But if tougher regulation is adopted, it could become harder for BNPL businesses to acquire customers.

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