Laybuy Says BNPL Has No Place In Bottle Shops

Case demonstrates urgent need for Government-backed Code of Conduct

Kiwi Buy Now, Pay Later (BNPL) provider Laybuy says news that an Auckland bottle store was offering Afterpay to their customers shows the urgent need for a Government-backed Code of Conduct for the BNPL sector.

Laybuy Managing Director Gary Rohloff says BNPL can be a useful tool to help consumers make purchases by providing them with access to short-term interest-free credit, but it needs to be offered responsibility.

“At Laybuy, we have a very strong view that BNPL should not be permitted to purchase alcohol, tobacco or for gambling. We back this up with a robust merchant sign-up process that sees us actively decline merchants who are primarily selling these regulated items. It is up to other companies to explain why they don’t do the same,” says Gary.

“We founded Laybuy because we wanted to give families a tool that would help them fit the things that they love into their budget. For that reason, our strong view is that BNPL should be used for discretionary or big ticket items, which is why we also made the decision from day one not to offer Laybuy for essential services such as at supermarkets.

“We just don’t think it is appropriate for our product to be used for the weekly food shop. Instead, we want to help customers upgrade their tech, buy some new homeware, fit some new clothing into their budget, help new mums buy toys, or purchase event tickets.”

Gary says that while he understands the calls for regulation to prevent BNPL being used for purchasing alcohol, he thinks drafting and enforcing them would be next to impossible.

“At the end of the day, BNPL is an interest-free credit product. For that reason, it is not dissimilar to a credit card. While we are open to an enhanced regulatory framework, wording regulations that prevent purchases being made with BNPL, while still allowing credit card purchases, would be difficult and could lead to unintended consequences,” says Gary.

“Instead, the Government should progress work to facilitate an industry Code of Conduct, similar to the one being advanced with the supermarket industry. The Code should outline obligations on the sector to protect consumers, including outlining what products should not be available to purchase by BNPL.

The introduction of an Industry Code was one option advanced by the Government as part of its recent consultation on the BNPL sector last year.

Gary says BNPL as a payment method is expected to grow rapidly, with forecasts suggesting its usage could quadruple globally in the next five years.

“BNPL is here to stay. In fact, more of us are going to be using it when we go shopping so we need to make sure that there are adequate rules in place to protect vulnerable consumers,” says Gary.

“While regulations might seem the easy answer, they are rigid and can quickly become outdated. An Industry Code, on the other hand, would not only ensure the sector was operating to agreed minimum standards but also allows the flexibility for updates to be made quickly without having to go through the formal regulatory process.

“This will ensure the sector, and the regulatory framework, are best positioned to respond to technological and other changes expected with the payments sector in the coming years.

“For that reason, we believe the Government should facilitate an Industry Code with urgency.”

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