The witch hunt being carried out against Buy-Now-Pay-Later (BNPL) providers is being undertaken to stop the $4 Billion river of gold that is credit card interest from drying up.

Afterpay and Zip have claimed that banks are forcing mortgage applicants to delete their BNPL accounts before approving their home loans. Zip boss Peter Gray claimed it’s the number one reason they’re losing accounts, despite his users’ stronger-than-average credit scores.

By pursuing BNPL under the guise of responsible home-loan lending, the banks are engaging in a blatant attempt to protect their very lucrative credit card business. 

When considering the risk profile of BNPL, banks should be reminded that in Australia: 

  • The average Afterpay balance is just $200 and doesn’t incur any interest,
  • The average Zip Pay balance is just $400 and doesn’t incur any interest, whereas
  • The average credit card balance is $2,933 and does incur interest

It’s completely contradictory to discriminate against such low levels of debt while selling products with potential for far higher levels of debt. As of May, there are 13 million credit cards in Australia, netting a national debt accruing interest of $20.9 billion

SmartWayToPay spokesman David Liston commented on the BNPL witch hunt;

“When you consider the numbers involved, there’s a disproportionate amount of commentary about the dangers of BNPL products coming from banks and their cronies.

“It’s particularly mad when you consider the fact that average credit card balances are nearly 15 times the size of the average BNPL account. 

“It’s little wonder credit cards were the most complained about financial product covered by the Australian Financial Complaints Authority.

“The smear campaign some banks are running is a clear attempt at protecting the river of gold that is credit card interest from drying up.”

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