Australia's central bank tells 'buy now, pay later' firms to drop surcharge ban
Australia's central bank said buy now, pay later (BNPL) firms will no longer be able to prohibit merchants from passing on surcharges for their services, robbing the fast-growing sector of one of its key advantages.
and Sezzle Inc fell 1.8% and 0.7% respectively.Analysts at Bernstein and UBS said the RBA's new position was likely to affect Afterpay the most, given its reliance on high merchant fees to fund its business model. UBS also said there was a "strong risk" that overseas regulators could impose similar restrictions on the BNPL industry.
Matthew Wilson, an analyst at Evans and Partners Ltd, said the changes would be a "minor issue" for Afterpay because its platform was already entrenched in Australia and valued among merchants.Afterpay said such changes were not expected to have a material impact, but that any reform should be subject to "policy processes" of government and parliament.
The RBA's move is a step in levelling the playing field with banks and credit card providers, who cannot ban merchants from passing on their fees to customers.However, the BNPL sector is still not bound by Australia's credit or responsible lending laws, primarily because it does not charge interest. headtopics.com
A 2019 survey conducted by the RBA found about half of BNPL users would switch to an alternative payment method if faced with a hypothetical surcharge on BNPL payments.Zip Co said it recognised "the RBA's new position on surcharging and will engage with Treasury on what this may entail".
The RBA also said it would force eight banks and debit card issuers with about A$4 billion in annual debit transactions to give merchants a multiple network option that would allow payments to be processed more cheaply. Read more: Reuters Top News »
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