More people using Buy Now Pay Later services for essentials including food and petrol

More people are being forced to use buy now pay later services to pay for basics such as food and petrol, as the cost of living and inflation continue to rise.

A new survey of financial counsellors found more than 80 per cent said clients were using buy now pay later for general retail.

However, the survey conducted by Financial Counselling Australia said many in the industry were increasingly worried about how people were using the services for everyday items.

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Of the more than 500 financial counsellors who completed the survey, 71 per cent said clients were using buy now pay later for food, while 41 per cent said they were using it for petrol.

Findings also revealed almost one-third said clients were using the services for utility bills, while 93 per cent said more clients were using buy now pay later in general.

Financial Counselling Australia chief executive Fiona Guthrie said she was concerned with the findings.

“BNPL was never intended as a way to pay for everyday living expenses,” she said.

“But the ease of accessing BNPL loans, combined with mounting cost-of-living pressures, has meant more people are resorting to it just to get by.”

The findings of the survey follow regulations unveiled by the federal government in May, which aim to protect high-risk borrowers.

Under the changes, buy now pay later providers would need a credit licence, in line with other lending services. They also must follow minimum standards and hardship requirements.

More people are using buy now pay later services to pay for basic services such as food and petrol. (Sam Mooy/AAP PHOTOS) Credit: AAP

Services would be treated like other credit products and would also be subjected to marketing restrictions.

The federal government is still holding consultations with the industry about the detail of the laws.

Guthrie said income verification and credit checks needed to be carried out, with larger loans also being subjected to responsible lending obligations.

“With BNPL so hard to keep track of, debts can very easily snowball, leading far more people to seek financial counselling,” she said.

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