Could ASX BNPL shares be set for imminent regulation as spending swells to $12 billion?

Buy now, pay later (BNPL) shares have been falling lately, but could they be on the verge of facing more regulation?

BNPL shares on the ASX include ZIP Co Ltd (ASX: ZIP), Sezzle Inc (ASX: SZL), and Block Inc (ASX: SQ2).

Let’s take a look at what is impacting BNPL shares?

What’s going on in the BNPL sector?

The Zip share price has plummeted 94% in the past year, while Sezzle shares have dived 97%. Block shares have sunk nearly 47% since joining the ASX on 1 February.

Now, it appears ASX BNPL shares could be facing tighter regulation. Federal Financial Services Minister Stephen Jones is planning to introduce legislation within a year to regulate the industry, ABC 7.30 reported.

Jones said:

Whatever you do in the financial services space, there’s big voices with deep pockets.

I don’t want to have an argument about whether this is credit or not, it clearly is.

The publication noted Australians exhausted nearly $12 billion on BNPL companies in FY21. This is more than double what was spent three years prior to the 2021 financial year.

However, a recent report shows that the BNPL market is pivotal for competition, as my Foolish colleague Zach reported this week.

The report highlighted that BNPL companies garner 4% of revenue from merchant fees, while credit cards depend on interest rates and late fees for profits.

Share price recap

Block shares have fallen 19% in the past month, while Zip shares have descended nearly 47% and Sezzle shares have dived 50% in this time frame.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has shed nearly 7% in a month.

The post Could ASX BNPL shares be set for imminent regulation as spending swells to $12 billion? appeared first on The Motley Fool Australia.

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More reading

• Here’s why ASX 200 tech shares are taking a beating on Wednesday
• Zip shares sink 6% despite BNPL spend doubling this financial year
• Down 6%, what is dragging the Block share price lower on Wednesday?
• Why are ASX tech shares struggling today?
• Why this economist believes ASX 200 BNPL shares are key to keeping the market competitive

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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