According to ASIC, the percentage of transactions that incurred a missed payment fee was at around 10 per cent in January 2020.
By June 2020, that figure dropped down to 2.4 per cent.
The report found that the buy now, pay later industry continued to grow in 2020, with the number of transactions made, the number of transacting users and the total value of transaction each growing by more than 20 per cent.
The number of transactions was up by 43 per cent, the number of transacting users increased by 25 per cent, while the total value of transactions as of June 2020 stood at just under $825 million, up by 43 per cent from around $576 million in June 2019.
However, most of the ASIC report covered the 2018–19 financial year, before the effects of the coronavirus crisis hit.
Its research showed that one in five consumers is missing payments. Missed payment fee revenue for all buy now, pay later providers in the review totalled over $43 million in 2018–19, a growth of 38 per cent compared to the prior financial year.
In response, ASIC said that while buy now, pay later arrangements are clearly popular as a payment method and work for the majority of users, some consumers are suffering harm.
“There are regulatory changes coming that will impact the industry, with the design and distribution obligations coming into effect in October 2021,” the regulator said.
“The industry is also developing a code of conduct. ASIC expects the industry to work collectively to develop a code that provides good consumer outcomes across the diverse range of business models operating in the industry.”