Reserve Bank says retailers should be able to charge for Afterpay

Love Afterpay? You may be charged to use it and other buy-now, pay-later schemes after a Reserve Bank review into the booming sector.

Shoppers could be charged to use Afterpay and other buy-now, pay later schemes following a Reserve Bank review.

A probe by the RBA into the booming buy now, pay later sector has recommended retailers be allowed to pass on the cost of providing these kinds of payment options.

Afterpay and other leading buy now, pay later providers generally take a cut of a sale, usually 3 per cent to 7 per cent.

But they ban the retailer from passing on this cost directly to the customer using the service.

Buy now, pay later services such as Afterpay and Zip have shaken up retail. Picture: Nikki Short

A review by the RBA’s Payments System Board released on Friday said retailers had provided “strong feedback” that buy now, pay later services have “become an essential payment offering” and the “high cost of these services was pushing up their payment costs”.

“The board has… concluded that it would be in the public interest for ‘buy now, pay later’ providers to remove their no-surcharge rules, consistent with the board’s longstanding position on such rules,” the RBA’s Payments System Board said on Friday.

“The board has carefully considered the array of views put forward by stakeholders. It has balanced the various costs and benefits of different policy proposals to reach conclusions that, in its view, best serve the public interest and meet the bank’s mandate to promote the efficiency of the payments system and competition in the market for payment services.”

Any change is likely to be some way off with the government needing to amend the nation’s payment laws.

While retailers could be given the option of passing on the cost, they may still elect not to do so.

“Given the complexity of the regulatory issues, the bank will continue engaging with the Treasury on regulatory approaches,” the RBA said.

Anthony Eisen and Nick Molnar from technology company Afterpay.

The final recommendation from the RBA is an about-face given the nation’s central bank last year indicated it was unlikely to recommend the no surcharge rule be removed.

Afterpay on Friday said the RBA’s final recommendation was “surprising” given its comments in December last year.

“The only thing that has changed since that time is that the BNPL (buy now, pay later) industry has become more competitive – which makes the RBA’s latest position on this issue even more surprising,” the company said.

“However, we welcome the RBA’s acknowledgment that it will engage with Treasury as part of the Treasury review of payments. Any reform in this area should rightfully be subject to the policy processes of the government and the parliament.”