The popularity of “buy now pay later” financing plans has spurred a number of questions, including whether such schemes are right for a business and why they need special regulation. In some places, for example, buy now pay later financing companies are classified as loans, so they are subject to a number of regulations. Officials are pursuing companies who don’t disclose all of the terms of their plans and fail to protect consumers.
The proliferation of online purchasing has led to an increased demand for alternative payment methods, particularly for young consumers. This has led to the government bringing in tighter regulation of buy now pay later schemes. Such schemes now fall under the remit of the Financial Conduct Authority. One of the main reasons for this trend is that they are convenient for consumers. And consumers are increasingly turning to these schemes to make their purchases, particularly in the current economic climate.
By regulating interest-free buy now pay later options, the government is seeking to ensure consumers are better protected and able to get the most out of these products. For a business wanting to learn more about KNOW YOUR CUSTOMER, go to a site such as www.w2globaldata.com/regulatory-compliance-solutions-and-software/know-your-customer/
The problem previously was that consumers often didn’t view such schemes as a type of credit or loan. The risk assessments are more geared towards the business offering the scheme as opposed to whether the consumer could afford the future payments. Despite the amount of credit often being low, the risk to consumers was that they could accrue multiple debts through a variety of providers.
