The Commonwealth Bank has released data that it says shows customers who use buy now, pay later operators are more likely to overdraw their accounts and fall behind on repayments, as it ramps up a push for tighter regulation of the sector.
As debate rages over whether BNPL firms such as Afterpay should be forced to conduct more stringent checks on customers, and CBA seeks to defend its turf, the bank has published data supporting its claim that customers with BNPL loans are at higher risk of over-extending themselves.
CBA says some buy now, pay later operators are not conducting the appropriate checks on customers before giving them credit.Credit:Michael Clayton-Jones
The BNPL sector responded by pointing to low levels of delinquency and defending the checks that operators conduct on their customers.
CBA’s analysis, provided to federal Parliament’s banking inquiry, says 7.2 per cent of its customers who used BNPL loans in 2020-21 overdrew their accounts, compared with 3.9 per cent of non-BNPL customers in a similar age bracket.
CBA said 4.8 per cent of its customers who used BNPL operators had fallen behind on repayments, compared with 2.8 per cent of non-BNPL clients. It said customers who used BNPL products had a 6.4 per cent chance of entering financial hardship, compared with 4.9 per cent for customers in a similar age bracket who did not use BNPL products.
The numbers come as CBA is going head-to-head with Afterpay in marketing its own BNPL product, called StepPay, which it says includes checks to prevent people from borrowing more than they should.
CBA’s group executive in charge of retail banking, Angus Sullivan, said: “We believe buy now, pay later is a product that can provide benefits to consumers, however there are a number of BNPL providers not undertaking the appropriate checks which can result in customers having access to credit where they potentially shouldn’t.
“As shown in our analysis, the lack of credit checks by some BNPL providers have resulted in a higher proportion of customers who find themselves in arrears and financial hardship, which is why we undertake both internal and external credit checks for our customers applying for StepPay.”
The figures were provided by CBA after chief executive Matt Comyn took a question on notice from Labor MP Andrew Leigh at the latest round of bank inquiry hearings.
