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BNPL data underutilised by credit sector, says agency

Australian consumers’ rabid appetite for buy now, pay later (BNPL) has left credit bureaus scrambling to keep up, one firm has found.

Research released by credit reporting agency Experian has highlighted Australia as the leading adopter of BNPL, with 21 per cent of surveyed Australians admitting to using not-quite-credit as a method of payment.
Despite this growing popularity both here and abroad, BNPL isn’t considered credit cards under Australia’s existing regulatory frameworks, and the data gathered by providers is only infrequently supplied to credit bureaus.

Speaking to Mortgage Business sister title nestegg, Experian director of credit services ANZ Nicholas Gudde explained that a lot of the potential value that could be unlocked by this data is falling by the wayside due to a lack of collaboration between BNPL providers and credit bureaus.

“This data is hugely beneficial for both consumers and lenders, and we’re encouraging more BNPL providers to proactively share their data with credit bureaus,” he said.

Mr Gudde said that BNPL data could help credit bureaus get a clearer picture of borrowers’ finances, allowing them to better service them.

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“However, it’s important that the acquisition process remains seamlessly integrated into the customer experience,” he added, noting that 74 per cent of consumers surveyed by Experian identified convenience as their top online priority.

Mr Gudde predicted that BNPL data could be of particular value to consumers with limited credit history.

“If a consumer with a ‘thin file’ can show responsible BNPL behaviours, they can demonstrate to lenders they could be responsible borrowers,” he said.

These comments come following a speech by Federal Treasurer Josh Frydenberg that launched government plans to modernise Australia’s payments systems legislation to better accommodate innovations like BNPL and digital wallets.

“Digital Wallets, Buy Now Pay Later and Cryptocurrency are fast becoming the new norm,” he said.

According to a recent report by payments platform provdier Marqeta, Australia is at the front of the pack when it comes to BNPL adoption, with 72 per cent of consumers increasing their use of BNPL over the past 12 months.

“We’re seeing a real shift in how consumers are wanting to pay in Australia, which is leading to a surge in Buy Now, Pay Later adoption,” said Marqeta country manager for Australia and New Zealand Duncan Currie.

“Australians are leading the charge when it comes to adopting new credit solutions, and credit card providers should take notice,” Mr Currie said.

[Related: BNPL to face new regulations under payment reforms]

BNPL data underutilised by credit sector, says agency
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