Credit bureau Centrix and the country’s leading buy now, pay later (BNPL) providers have launched a new data-sharing platform targeting customers who are in financial difficulty.
PayWatch is described as a world-first credit reporting system that will allow Afterpay, Zip and Laybuy - which together account for more than 90 per cent of New Zealand’s BNPL customers - the ability to share overdue account data daily and flag when a consumer is behind on repayments.
PayWatch gives BNPL providers valuable information about a consumer’s credit risk as they assess new account applications and monitor existing customers.
It also ensures BNPL providers are aware if a prospective new customer is behind on their existing repayments with another provider.
“Unlike the existing Comprehensive Credit Reporting, which supports traditional credit products and their monthly payment cycles, this dynamic and near real-time system captures BNPL repayment performance on a daily basis, giving BNPL providers an accurate view of someone’s indebtedness status more frequently,” said Centrix chief operating officer Monika Lacey.
“Our goal is for all BNPL providers in New Zealand to opt into PayWatch to combat the accumulation of debt by those who face financial difficulty and support healthy consumer relationships with credit products.”
Centrix’s latest Credit Indicator report showed BNPL arrears reached record highs in March, with 10.5 per cent of accounts behind on repayments.
BNPL provider Laybuy welcomed the launch of PayWatch, calling it a game-changer to better protect vulnerable consumers.
Laybuy managing director Gary Rohloff said PayWatch meant BNPL providers would now have a much clearer picture of an applicant’s credit history, allowing them to make more informed decisions about who to extend credit to.
“While Laybuy has always reported its credit data, this hasn’t always been the case with some other BNPL providers,” Rohloff said.
“Unfortunately, this has impacted on the ability of the credit checks we undertake to pick up whether an applicant might be behind on their payments with another BNPL provider. This has resulted in an increased risk that credit was being extended to those who might already be struggling.
“The launch of PayWatch prevents this and greatly reduces the chances of vulnerable consumers falling into a debt spiral by jumping from provider to provider when they fall behind in their payments.”
Rohloff said PayWatch was particularly timely given the current cost of living issues.
“Many New Zealanders are facing increasing pressure on their budgets. We know that BNPL can be a useful tool to help them spread the cost of a purchase without incurring interest, but it is credit and it needs to be used responsibly.”
He said the result of work in risk management tools has seen their New Zealand default rate remain both very low and stable at under 1.5 per cent of gross merchandise value.
“The launch of PayWatch is another tool in our arsenal, ensuring that we can continue to be a leader in responsible lending,” Rohloff said.