Long Holders, ZIP 2024 Retrospective A Year to Remember, Victory Dance Time, page-105

Merchants wishing to provide their own in-house financing arrangements are exempt of the rules which can strangle BNPL providers and their agreements.

'The introduction of the "third-party hook" in the new Buy Now, Pay Later (BNPL) legislation passed in December 2024 has significant implications for Zip and merchants:

1. Definition of BNPL arrangements: The legislation defines a BNPL arrangement as one involving a third-party 'hook' between merchants, consumers, and BNPL providers
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   . This means Zip's business model, which involves facilitating transactions between merchants and consumers, falls squarely within the regulated BNPL category.
2. Exclusion of direct merchant financing: The third-party hook specifically excludes products financed directly by merchants
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   . This creates a clear distinction between Zip's services and any in-house financing options merchants might offer.
3. Regulatory compliance: Zip will need to ensure its operations comply with the new regulations, including holding an Australian Credit Licence and adhering to responsible lending obligations
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   . This may increase operational costs and complexity for Zip.
4. Merchant relationships: The third-party hook definition may impact how Zip structures its relationships with merchants, potentially requiring adjustments to existing agreements to ensure compliance with the new regulatory framework
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5. Consumer protection: Merchants partnering with Zip will benefit from increased consumer protections, which may enhance customer trust but could also lead to more stringent approval processes for transactions
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6. Fee structure implications: The legislation's focus on the tripartite relationship may affect how Zip structures its fees for both merchants and consumers, potentially impacting revenue streams
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7. Competitive landscape: The third-party hook definition creates a clear regulatory distinction between BNPL providers like Zip and large retailers offering their own financing, potentially influencing merchant choices in payment options'