CBA chief Matt Comyn lashes Afterpay on customer arrears

CBA’s chief has launched a strong pitch for tighter regulation of buy now, pay later players, saying they have now reached sufficient scale.

Commonwealth Bank chief executive Matt Comyn has drawn fire from Afterpay after telling parliament that the buy now, pay later behemoth should be regulated as a credit provider and perform credit checks on all customers.

Appearing before the House economics committee, Mr Comyn noted that the level of consumer spending in the sector was “clearly significant” at $10bn.

“We’re not talking here about a couple of small start-up companies that are unfunded,” he said.

“We’re talking about an ASX 20 company (Afterpay) or, put another way, they were recently about 85 per cent of the market capitalisation of Macquarie Bank.”

Hardship rates, he said, were double in the BNPL sector, which also had higher arrears rates, and it was important for CBA to act responsibly even if there was a current loophole in the legislation.

“I would suggest the line around innovation at the moment is skewed to a complete absence and lack of regulation in a number of areas related to credit product and facilities, comprehensive credit reporting, the consumer data right, and facilitating competition and rights for merchants to pass on higher input costs to consumers as they are able to do for other debit and credit products,” Mr Comyn said.

CBA has partnered with Swedish BNPL group Klarna in Australia and New Zealand and has also launched its own platform.

Mr Comyn’s commentary drew an immediate counter-attack from Afterpay, which is also engaged in a battle with Klarna for supremacy in the US – the world’s biggest retail market.

Afterpay said in a statement that its users in Australia had lower personal liabilities than non-users.

This was not the result of demographic differences, because a like-for-like comparison with a matched group had confirmed it.

“Afterpay users also save more and have higher incomes,” the statement said.

The company also said that 90 per cent of its customers used a debit card, and 98 per cent of instalment payments had never incurred a late fee.

Also, 70 per cent of customers had never paid a late fee, with Afterpay customers more likely to be in the top household income bracket than the general population and less likely to be in the bottom income bracket.

Afterpay customers also paid “significantly lower fees” of 1.2 per cent than other users of financial products.

The competitive heat in the sector has turned up several notches since CBA arrived on the scene.

While acknowledging the work and innovation undertaken to build “such a large and successful company”, Mr Comyn said on Thursday it was “quite a feat to avoid all of that regulation”.

“I don’t think it is unreasonable, given the size of market, the scale of the individual players – in one instance being an ASX 20 company – to make an investment in understanding their customer circumstances and financial position, to be able to report to credit reporting agencies,” he told the economics committee.

“And I also think it is appropriate for the businesses accepting buy now, pay later providers, who are effectively incurring costs somewhere between 3 per cent and 6 per cent, should be entitled contractually to pass on costs to consumers incurring those costs for them.”

Westpac chief executive Peter King agreed that non-bank players in the payments industry should be treated the same way as banks once they reached an appropriate size.