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(Image: Tina Tiller)
(Image: Tina Tiller)

BusinessNovember 2, 2022

Farewell to the unlimited freedom of buy now, pay later schemes

(Image: Tina Tiller)
(Image: Tina Tiller)

The government is moving forward with plans to stop ‘vulnerable’ consumers falling into debt traps. 

Most of us have been there: perusing the never-ending online mall and thinking to ourselves “Could just Afterpay it.”

Buy now, pay later schemes like Afterpay have become widespread in recent years. While Afterpay is just one example – there’s also Laybuy, Zip and Humm, among other schemes – it’s a name that’s almost become synonymous with the world of online shopping. You can now access practically everything from food to clothes, event tickets and flights via the handy – but potentially dangerous – trap of four interest-free instalments. There were numerous headlines earlier this year after a bottle store announced it would be introducing Afterpay (a proposal it quickly backed down on).

But with the growth of buy now, pay later schemes has come a rise in concerns that low income New Zealanders could be falling into debt traps. It’s easy to click on an Afterpay link and forget that in a fortnight you will have to pay again – or risk the fees that come with late payment.

Now, the government has followed through on its plans to help protect more vulnerable New Zealanders.

So what has been announced exactly?

There’s not a lot of detail, but the lowdown is this: you can soon expect affordability checks on certain buy now, pay later loans.

According to the commerce and consumer affairs minister David Clark, loans of $600 or more will come with the same types of protections offered to borrowers that use credit cards and personal loans. 

Currently, providers of buy now, pay later schemes are able to skirt around the legislation New Zealand has in place for regular credit providers. The government is hoping that by tightening up the existing law it will force companies like Afterpay to abide by the same rules as regular lenders.

What will that involve?

A couple of options are on the table at this stage. The Ministry of Business, Innovation and Employment will now seek feedback on two options for what affordability assessments will be required. It will either involve a full affordability assessment in line with the Credit Contracts and Consumer Finance Regulations Act. (As a former law student, the name of this legislation haunts me.)

A slightly less intense affordability assessment is also being considered – that would be based on “reasonable inquiries” into the affordability of the loan.

Smaller loans, under the threshold limit, will not have to go through the same process, but “comprehensive credit reporting” will need to occur.

In short, it’s hoped this change will stop users of buy now, pay later schemes from being able to take on unrealistic debt. However, it will still be far looser than the requirements in place for people seeking to get a credit card. You won’t need to prove your income or ability to pay back debt in order to make an account on a platform like Afterpay.

You can expect to see these changes in place sometime next year.

Why is the government doing this?

Minister Clark, in his own words, simply said it’s simply “the right thing” to do. 

“As the global cost of living crisis puts pressure on New Zealanders and their families, we are taking action to help them avoid unmanageable debt, especially as the Christmas season looms,” said Clark. “While for many, [buy now, pay later] can be a useful way to spread the cost of large household purchases, we are trying to stop vulnerable people getting into a spiral of debt if lenders allow them to take on more than they can afford.”

Is this a problem worth fixing?

Yes. Earlier this year it was reported that nearly 9% of all buy now, pay later accounts were in arrears, meaning 9% of users were racking up late fees on their purchases. It might not the same as accruing interest on a credit card, but it can easily make existing debt spiral further out of control. There’s also the issue of people using their credit cards to pay off buy now, pay later debt (about one in five people do this).

There are over half a million users of these platforms in New Zealand – a number that’s growing. While the government won’t want to piss them off by changing the schemes too much, that’s a lot of people potentially taking on debt they can’t pay off.

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How long have tighter regulations been called for?

Last December, Ngā Tāngata Microfinance, Sorted.org.nz and four other organisations in the financial capability sector teamed up on a campaign encouraging people to “spend safely” before Christmas. It followed concern about the uptake of buy now, pay later. 

“If you’re on a low income and actually making a purchase that over six weeks is going to cost you $20 a week, have you actually considered [whether] next week you’ll still have $20 available?” questioned Ngā Tāngata’s Natalie Vincent.

Meanwhile, in an interview with Stuff, financial mentor Jeremy Cooper said he couldn’t understand how lower income people were able to easily open multiple buy now, pay later accounts, providing them with thousands of dollars they might be unable to repay.

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blue tinged doors open with a filter in a little blue bubble
Image: Tina Tiller

BusinessNovember 2, 2022

We know clean air reduces Covid spread – so why so many stuffy shops, bars and offices?

blue tinged doors open with a filter in a little blue bubble
Image: Tina Tiller

When it comes to improving air quality, the onus is on commercial operators to figure it out for themselves.

Every day, you breathe in 11,000 litres of air. You also breathe in whatever is in that air: dust, air pollution, pollen –  and viruses. New Zealand has averaged 3,000 Covid cases per day in the last week, with case numbers on the increase. As an airborne disease, most of these cases will have been caused by people breathing in the virus. 

“If you have a massive dirty glass of water, you’re not going to drink it, or even bathe in it,” says Julie Bennett, a senior research fellow at the University of Otago who studies the impact of indoor air quality on public health. “And yet people are happy to breathe pollution and virus-laden air.” 

Bennett says there are two main ways to improve indoor air quality and reduce the risk of airborne disease transmission. The first is ventilation, which dilutes the harmful particles in indoor air, making it less likely you’ll breathe them in. The second is filtration, where all the air in a room is regularly passed through an ultrafine filter to clean it, or sterilised by UV light. While viruses, including Covid, are microscopic, Bennett says they tend to be attached to larger particles in the air, and will be caught in such a filtering system. 

Air filtration and ventilation work best in tandem with more visible protective measures, like masks, says Bennett. “Masks reduce the viral load in the air, so you’re not breathing in high quantities of viruses,” she says. In places where masks can’t be used – when people are eating, for instance – high airflow and filtration can significantly reduce risk. 

But both these methods for ensuring clean air have limitations. Air filters need to be the right size for the volume of air in a room, and work most effectively if they’re placed in the centre of a room, which can get in the way. And not all spaces have equal access to windows and doors that can be opened to provide ventilation. 

a dimly lit room with lamps!
The Wine Cellar in St Kevin’s Arcade (Image: supplied)

Ensuring airflow in an underground bar, for instance, can be quite tricky – as Rohan Evans, proprietor of Karangahape Road’s The Wine Cellar found. The live music venue in Auckland’s St Kevin’s Arcade has little access to outside air. “We definitely spend a lot of time with the doors open in the bar room to create a through-flow from the arcade,” Evans says.

He started improving the ventilation in the building back in 2015, but funding available for live venues after the first lockdown allowed him to install extra air conditioning in both of the venue’s main rooms. “The context of the pandemic made it more important to make as much of a difference in ventilation and movement of air as we could,” he says. 

While private businesses are currently given little to no guidance by the government on how to make sure the air in their premises is clean, keeping staff and customers safe makes good business sense, says Jane Arthur, co-owner of Wellington’s Good Books bookshop. Arthur has purchased air filters for her space, made a policy of keeping the door open at all times, and provides staff with high-quality masks. “Our business doesn’t exist without our staff, so a lot of the measures are about trying to protect [them],” she says. “It’s not cheap, but it’s a health and safety necessity – protecting our staff lets us keep the doors open so the money can keep rolling in.”

This stance has received positive feedback from customers, too. “We’ve had people come in and say that they’ve been too nervous to go anywhere for months but knew that if they came here the risk wasn’t so high,” says Arthur.

Interior of a bookstore, with customers
Inside Good Books of Wellington (Photo: Supplied)

Despite the benefits of cleaning the air, filtration can be expensive. Even small HEPA filters can be several hundred dollars, and the filters inside them need periodic replacing. “Ventilation is free,” Bennett notes; it’s simpler and cheaper than filtration (although buildings like apartments have less natural airflow, so often require air conditioning and ventilation systems to be installed while they’re being constructed). 

While there has been some government support for schools to improve ventilation, providing CO2 monitors and air filters, and even fixing window opening mechanisms, commercial operators are essentially on their own. A page on the Unite Against Covid-19 website lists the benefits of ventilation, and notes that buildings with HVAC systems have to maintain ventilation as part of building Warrant of Fitness inspections. 

Maybe policy for air quality can change. Arthur undertook considerable research to figure out what size of filter to get for her business in Wellington; she also uses a CO2 monitor. Even if the government doesn’t fund ventilation, she thinks providing tools for businesses to assess how much ventilation their space needs could be helpful.

Another policy intervention to put ventilation on the radar would be mandating indoor air quality standards, Bennett says; Aotearoa currently has standards for pollutants outside, but not inside. This could have benefits that go far beyond the pandemic. “Improving air quality and reducing CO2 concentrations can go a long way to improving productivity and reducing other disease transmission too,” she says. 

While there are complexities to setting up ventilation and filtration in indoor spaces, Arthur says that with a little research, it’s pretty simple – and definitely worth it. “I walk past other shops and the doors are closed and masks are off and all I see is breath now,” she says. “It’s like – just open the doors! Get some airflow! It’s easy!” 

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