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  • Frank Tian

BNPL Regulation Update

BNPL Regulation Update - Slowly, But Surely.


The window of regulatory arbitrage is gradually closing in several markets.


🇦🇺 Australia


Jun 2022: the government announced its plan to regulate BNPL as a credit product.


Stephen Jones, the Australian financial service minister: “Can we stop having an argument about whether [they’re] credit or not? … Let’s start working on regulating [them] within the credit space.”


🇬🇧 UK


After the Woodlard Review, the Treasury launched the initial consultation on BNPL in Oct 2021.


Jun 2022: the government published its response to the consultation and confirmed its intention to regulate. Note the scope goes beyond BNPL to cover short-term interest-free credit (STIFC) now.


Next is the draft legislation near the end of the year.


🇮🇳 India


Jun 2022: The Reserve Bank of India issued the guideline that non-bank financial institutions cannot load Prepaid Payment Instruments (wallets, pre-paid cards) with credit lines.


Now BNPL servicers cannot use prepaid payment instruments as credit facilities.


Business Standard describes: “The RBI wants every small-ticket loan to be a marriage officially solemnized in the church of banking.”


🇺🇸 US


Dec 2021: CFPB opened an inquiry into BNPL and asked 5 top operators for data. It also requested feedback from the public.


However, CFPB did not include BNPL in the top priority list, which includes open banking and banking “junk fees”.


Maybe the agency is right - the current market force is enough to course correct.


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