NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • Deloitte Fast 50
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In

Advertisement
Advertise with NZME.
Home / Business

Harmful ‘Buy Now, Pay Later’ debt traps targeted in new Government checks

Adam Pearse
By Adam Pearse
Deputy Political Editor·nzme·
2 Nov, 2022 04:10 AM5 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save
    Share this article
Video Player is loading.
Current Time 0:00
/
Duration 0:00
Loaded: 0%
Stream Type LIVE
Remaining Time -0:00
 
1x
    • Chapters
    • descriptions off, selected
    • subtitles settings, opens subtitles settings dialog
    • subtitles off, selected

      This is a modal window.

      Beginning of dialog window. Escape will cancel and close the window.

      Text
      Text Background
      Caption Area Background
      Font Size
      Text Edge Style
      Font Family

      End of dialog window.

      This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.

      Autoplay in
      5
      Disable Autoplay
      Cancel Video
      What we can expect from today’s unemployment figures, relief for Ruapehu and South Island braces for severe weather in the latest NZ Herald headlines. Video / NZ Herald

      Debt traps created by buy now, pay later schemes are being addressed through new affordability checks with the intention to stop vulnerable people from getting into a “spiral of debt”.

      It follows calls for regulation from business and health advocates who say the schemes could lead to increases in family violence, drink-driving, health problems and gambling.

      Buy now, pay later (BNPL) services allowed users to make purchases on credit. Usually, 25 per cent of the total price was paid upfront and the rest in three timed installments. Interest was not charged but users could face late fees if they did not keep up with payments.

      It was a popular phenomenon for Kiwis - the amount of money spent through such schemes in New Zealand was $1.7 billion in 2021, up from $755 million in 2020.

      Read More

      • Buy now pay later has grown at phenomenal rate but ...
      • Concerns buy now, pay later schemes could fuel addiction ...
      • Humm to stop offering NZ buy now pay later service ...
      • Cooking the Books podcast: How to stop 'buy now, pay ...
      Advertisement
      Advertise with NZME.
      Advertisement
      Advertise with NZME.

      The Ministry of Business, Innovation and Employment sought public feedback on the benefits and costs of BNPL a year ago, which led to today’s Government announcement that affordability checks would be applied to some BNPL loans.

      Under the proposal, the checks would be necessary for loans above $600, giving borrowers a similar level of protection to those using other credit contracts, such as credit cards and loans.

      As the global cost of living crisis puts pressure on New Zealanders and their families, we are taking action to help them avoid unmanageable debt, especially as the Christmas season looms,” Commerce and Consumer Affairs Minister David Clark said.

      “While for many, BNPL can be a useful way to spread the cost of large household purchases, we are trying to stop vulnerable people getting into a spiral of debt if lenders allow them to take on more than they can afford.”

      Advertisement
      Advertise with NZME.
      Commerce and Consumer Affairs Minister David Clark. Photo / Mark Mitchell
      Commerce and Consumer Affairs Minister David Clark. Photo / Mark Mitchell

      Comprehensive credit reporting would be required for smaller loans under the threshold, which was yet to be confirmed.

      All BNPL providers would need to have hardship processes to support those who found themselves behind on payments, and belong to a dispute resolution scheme. Directors and senior managers would also need to be certified fit and proper by the Commerce Commission.

      BNPL has been designed in a way that was not currently subject to the consumer protections in the Credit Contracts and Consumer Finance Act 2003. The new regulations would be developed with the aim to treat BNPL as a consumer credit contract under the CCCFA.

      Consultation on the proposal’s detail, such as the threshold and what would occur for loans above it, would commence later this year. It was intended final regulations would be made in 2023.

      Ruth Smithers, chief executive of financial mentoring service provider FinCap, said the regulations were a “huge step forward” to address BNPL lenders that pulled in a quarter of their revenue from late fees and sending whānau into unfair debt collection, Smithers claimed.

      “It is great to see some action that should take the most egregious lender conduct out of this rapidly growing market,” she said.

      She did consider the $600 threshold to be too high.

      “We will keep working closely with financial mentors to understand the impact of the changes, and we will continue to call for the Government to close all loopholes.”

      In July, the owner of Auckland liquor shop Panmure Bottle O’ came under fire for his decision to allow people to use BNPL provider Afterpay to buy alcohol.

      Within hours of the Herald’s reporting on the move, the store said it would no longer accept that form of delayed payment for alcohol.

      Advertisement
      Advertise with NZME.

      Store management said they were “reviewing our policies” and that “hence, until further notice Afterpay will not be accepted as a method of payment in our store with immediate effect”.

      Te Arawa iwi justice representative Billy Macfarlane told the Rotorua Daily Post last year that increasing alcohol accessibility could, in his opinion, lead to more drugs, gambling and abuse.

      He said money governed how much you can drink.

      “If you went to the bottle store and you only had $30 on you, you can only buy $30 worth of alcohol. If you got a buy now pay later scheme you can just buy more alcohol and you can get yourself in a worse state.”

      Members of the business and health sectors are concerned at the prospect of BNPL schemes being used to sell alcohol. Photo / NZME
      Members of the business and health sectors are concerned at the prospect of BNPL schemes being used to sell alcohol. Photo / NZME

      Salvation Army head of social services Lynette Hutson, also speaking to the Rotorua Daily Post, feared BNPL schemes becoming prevalent in the alcohol industry could increase family violence, drink-driving, health consequences, broken relationships, debt and gambling.

      While members of the business community recognised its value, some were concerned about how widely BNPL schemes were applied

      Advertisement
      Advertise with NZME.

      Bay Financial Mentors manager Shirley McCombe told the Bay of Plenty Times in August that the use of the services to purchase alcohol concerned her, especially for those who lived with addiction.

      She said the sector had “huge concerns” about clients accumulating debts on buy now, pay later services.

      Alcohol Healthwatch executive director Dr Nicki Jackson said alcohol was New Zealand’s most harmful drug, so effective safeguards needed to be in place.

      BNPL schemes took alcohol accessibility to a new level, especially online, she said.

      “Low upfront prices for alcohol are attractive for many groups sensitive to the price of alcohol, including low-income drinkers and young people. These are also groups that experience significant harm from their drinking.”


      Advertisement
      Advertise with NZME.



      Save
        Share this article

      Latest from Business

      Premium
      Airlines

      Kiwi victims of Qantas cyber attack can lodge complaint in NZ, expert says

      Premium
      Property

      Contrasting sites: New supermarket opens next to abandoned car lot

      Business

      Intel posts $12.9b revenue, cuts 15% of workforce for agility


      Sponsored

      Sponsored: More cash, less stress - a lending strategy for investors

      Advertisement
      Advertise with NZME.

      Recommended for you

      Trump signs order to block 'woke AI' in federal contracts
      World

      Trump signs order to block 'woke AI' in federal contracts

      US regulators approve contentious $8b Skydance-Paramount merger
      World

      US regulators approve contentious $8b Skydance-Paramount merger

      Afternoon quiz: What is the largest bone in the human skull?
      New Zealand

      Afternoon quiz: What is the largest bone in the human skull?

      MFAT tells Kiwis to avoid popular Asian holiday spots as conflict erupts
      New Zealand

      MFAT tells Kiwis to avoid popular Asian holiday spots as conflict erupts

      Convicted in Venezuela, freed by the US
      World

      Convicted in Venezuela, freed by the US

      Fears for missing West Coast tramper with remarkable life story
      New Zealand

      Fears for missing West Coast tramper with remarkable life story



      Latest from Business

      Premium
      Premium
      Kiwi victims of Qantas cyber attack can lodge complaint in NZ, expert says
      Airlines

      Kiwi victims of Qantas cyber attack can lodge complaint in NZ, expert says

      An NZ lawyer says affected people in this country can still take action against Qantas.

      25 Jul 03:03 AM
      Premium
      Premium
      Contrasting sites: New supermarket opens next to abandoned car lot
      Property

      Contrasting sites: New supermarket opens next to abandoned car lot

      25 Jul 01:00 AM
      Intel posts $12.9b revenue, cuts 15% of workforce for agility
      Business

      Intel posts $12.9b revenue, cuts 15% of workforce for agility

      24 Jul 11:01 PM


      Sponsored: More cash, less stress - a lending strategy for investors
      Sponsored

      Sponsored: More cash, less stress - a lending strategy for investors

      22 Jul 07:56 AM

      NZ Herald
      • About NZ Herald
      • Meet the journalists
      • Newsletters
      • Classifieds
      • Help & support
      • Contact us
      • House rules
      • Privacy Policy
      • Terms of use
      • Competition terms & conditions
      • Our use of AI
      Subscriber Services
      • NZ Herald e-editions
      • Daily puzzles & quizzes
      • Manage your digital subscription
      • Manage your print subscription
      • Subscribe to the NZ Herald newspaper
      • Subscribe to Herald Premium
      • Gift a subscription
      • Subscriber FAQs
      • Subscription terms & conditions
      • Promotions and subscriber benefits
      NZME Network
      • The New Zealand Herald
      • The Northland Age
      • The Northern Advocate
      • Waikato Herald
      • Bay of Plenty Times
      • Rotorua Daily Post
      • Hawke's Bay Today
      • Whanganui Chronicle
      • Viva
      • NZ Listener
      • Newstalk ZB
      • BusinessDesk
      • OneRoof
      • Driven Car Guide
      • iHeart Radio
      • Restaurant Hub
      NZME
      • About NZME
      • NZME careers
      • Advertise with NZME
      • Digital self-service advertising
      • Book your classified ad
      • Photo sales
      • NZME Events
      • © Copyright 2025 NZME Publishing Limited
      TOP
      search by queryly Advanced Search