Here is another reason that Apple has decided to bale out of...

Here is another reason that Apple has decided to bale out of BNPL and lending

The Reserve Bank of Australia will launch a review of payments regulation – that will consider forcing buy now, pay later operators to allow retailers to pass the cost of services through to customers – as soon as the federal parliament passes the bill to provide it with stronger powers over digital wallets such as Apple Pay, and BNPL.

Apple said on Tuesday it would stop financing buy now, pay later loans directly from its balance sheet, having set up a separate BNPL financing subsidiary last year, in favour of offering BNPL loans from specialist providers directly from its Apple Pay wallet, a shift it unveiled last week.

Apple’s withdrawal of its own BNPL product comes as BNPL is being regulated as credit around the world. Apple is keen to avoid being subjected to banking-style regulation.

However, amendments to the Payment Systems Regulation Act (PSRA) in Australia will provide the RBA with broad powers over it and other global technology platforms moving into payments, along with the BNPL industry, which has grown rapidly outside regulators’ remit.

Reserve Bank head of payments policy Ellis Connolly said in a speech on Tuesday morning that BNPL continues to grow strongly, with $20 billion in value (but just 2 per cent of all card purchases) going through the services in 2023, forcing up payment costs.The average fee charged to retailers for BNPL is 3.5 per cent of the cost of the goods, compared to 0.4 per cent for debit cards and 0.8 per cent for credit cards. BNPL is “typically an expensive way for merchants to accept payments”, Mr Connolly said.He revealed the central bank is considering whether BNPL company bans on merchant surcharging the services should be removed, using the new powers.

“Surcharges could be used by merchants to signal to consumers that they are using a relatively expensive payment method,” he said.