Buy Now and Panic Later?

Payment Solutions: When Legal Hammer Finally Drops, Who is Left Holding the Bill?

- 

Buy now, pay later options have strutted onto South Africa's financial runway with the swagger of innovation. They offer interest-free installments, bypassing credit checks and boasting sleek user interfaces that make old-school lay-byes look prehistoric.

For consumers, it feels like a dream: swipe today, split it tomorrow. For platforms, it is fintech gold. But beneath the surface of this frictionless facade lies a regulatory grey zone thick with risk, ambiguity and potential litigation, warn Lerato Lamola and Anél De Meyer, partners at Webber Wentzel.

Is buy now, pay later empowering consumers, or quietly indebting them? And when the legal hammer finally drops, who is left holding the bill?

Buy now, pay later services allow consumers to buy things immediately and pay for them in installments over a set period, usually without interest if payments are made on time. However, as usage of this option increases, concerns around consumer debt, regulatory arbitrage and financial exclusion also grow.

Lamola and De Meyer say the central question in South Africa is whether buy now, pay later products fall within the jurisdiction of the National Credit Act or the Financial Advisory and Intermediary Services Act (FAIS Act).

The National Credit Regulator (NCR) is responsible for enforcing compliance with the National Credit Act, while the Financial Sector Conduct Authority (FSCA) is responsible for compliance with the FAIS Act.