Is the government going to announce a new Buy Now Pay Later Tax before the election?

Since December last year there have been reports and rumours circulating that the Federal Government could impose a new tax on Buy Now Pay Later (BNPL) users. 67% of Afterpay users are Gen Z or Millennials. This means it’s likely any new BNPL tax would  hit young people the hardest.

As it stands, consumers who use BNPL apps don’t pay a fee on their transactions. The proposed new tax would allow merchants to surcharge customers for their transactions. Put simply, a $100 purchase could cost a user $104 if a 4% surcharge was applied to a BNPL purchase by the merchant. 

We believe there are two likely outcomes for those young consumers. Firstly, they’ll pay more for goods if they keep using BNPL. However, we believe this tax would result in an even worse outcome; young people will be pushed back to high interest credit cards. 
BNPL is a great alternative to credit cards. It was reported that over one million Aussies cancelled credit cards in favour of no-interest alternatives like BNPL. However there’s still a  long way to go. There’s still $17.68 billion worth of credit card debt accruing interest in Australia. To push young people back on to these types of products would undo all the great work that’s been done in getting them off credit card debt.