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A prominent 'buy now pay later' scheme provider says it supports any government moves to protect consumers.
Consumer Affairs Minister David Clark remains concerned that buy now pay later schemes have the potential to cause financial hardship and he's awaiting Ministry advice before deciding if further regulation is needed.
The services including Afterpay allow people to get the goods with one upfront payment - clearing the balance in three further instalments.
They can be charged late fees if they default, but unlike credit cards there's no interest. They're also not covered by the Consumer Finance Act, so do not have to check if people can actually pay the debt without substantial hardship.
And concerns have been raised about customers using pay later services to buy alcohol and holidays.
Afterpay's Michael Saadat said consumers had the choice to decide if they wanted to take out the loans and also had the choice of using credit cards, for which they could incur interest each month of 20 percent or more if they did not pay off their account in full.
He told Checkpoint Afterpay was great for most people with 98 percent of consumers worldwide not incurring late fees.
"We never charge interest, we keep our limits low, we stop people spending as soon as they miss a repayment."
Saadat said the company was supportive of any moves by the government to protect consumers.
He would be happy for Afterpay to be part of any government legislation such as the Consumer Finance Act as long as allowances were made for the way it operated.
He said responsible spending was encouraged, however, he did not have figures for New Zealand consumers on the amount they were paying in late fees because figures were compiled globally.
The Afterpay app. Photo: Afterpay
Saadat said the business made 90 percent of its profit from merchants who were willing to pay for the service in return for having customers delivered to them. It was the opposite way that credit cards made money.
Spending limits were kept low when a consumer was starting on Afterpay and the first instalment had to be paid immediately, otherwise the transaction would not go ahead.
"The product is designed to be very low risk."
Most customers would own their goods within six to eight weeks while credit card users might take much longer to fully own their goods because of low minimum repayments.