Buy now, pay later UK regulation may slow but not halt growth - analysts

Asia Pacific Telecom Co

02/02/2021 23:56

** Citigroup, RBC Capital Markets say UK regulation may
cause some headwinds for customer and retailer uptake by the
buy-now-pay-later (BNPL) industry but not halt its explosive
growth
    ** A review https://www.fca.org.uk/publication/corporate/woolard-review-report.pdf
 by the UK's Financial Conduct Authority called for BNPL
services to be urgently regulated  urn:newsml:reuters.com:*:nL8N2K81F2  urn:newsml:reuters.com:*:nL1N2K814J
    ** It called for providers to make affordability checks
before lending to a customer; suggested BNPL use be reported to
credit agencies and retailers seek permission to offer the
service
    ** Citi, RBC say it remains unclear how onerous the checks
by BNPLs would need to be
    ** If retailers are asked to apply for permission, Citi
expects take-up by merchants to be impacted, especially SMEs
    ** Afterpay  APT.AX , Klarna, Laybuy  LBY.AX , Openpay
 OPY.AX  all welcomed the review 
    ** Citi reckons the UK will represent ~10% of Afterpay's
gross profit in FY26 and will be more impacted than newer
entrant Zip  Z1P.AX  by regulation
    ** RBC says regulation may impact growth rates around the
edges, but does not see regulation as a roadblock to continued
strong growth
    ** APT and Zip edged higher, while OPY and LBY drop more
than 1%; the ASX 200  .AXJO  is up 0.9%

 (Reporting by Nikhil Kurian Nainan)
 ((NikhilKurian.Nainan@thomsonreuters.com; Twitter:
@NikhilKurianN))