When will the quota regulation appear?
“The regulator is negotiating with all interested parties and considers it possible to establish a fairly long transition period for the regulation to come into force,” the press service of the Bank of Russia told RG. And they added: the size of the market is not yet that large and its participants will need time to adapt their business models and gradually adjust to the new requirements.
To protect the rights of users of the BNPL service (buy now, pay later or buy now, pay later – RG note), it is important to eliminate arbitrage between installment payment plans and consumer loans, trusts the Central Bank. That is, the user of the installment plan must be protected in the same way as the borrower who has contracted a consumer loan.
As the Central Bank said, they started this work in advance so as not to repeat the mistakes of other countries. They allowed BNPL to grow and then ran into a series of problems. These include an uncontrollable increase in debt burden, inadequate penalties for late payments and debt collection. “The Bank of Russia’s goal is for the installment market to develop in a civilized manner from the beginning,” the regulator shared.
At the same time, the Central Bank recalled that they want to limit the uncontrolled growth of the debt burden of borrowers and at the same time maintain a neutral technological space for the operators of such services.
Now the details of the proposals are being discussed with market participants, professional lenders and associations, including within the framework of a special working group formed at the Bank of Russia. As the head of T-Bank’s “Shares” service previously told RG, they participate in it and believe that the service needs responsible regulation.
“The most effective thing for BNPL is to establish a maximum term and amount, mandatory partial payment of goods or services by the consumer at his own expense, the absence of commissions for the consumer and the prohibition of differentiating the cost of goods “, considers.
It is important to avoid mis-selling or taxing another product, hidden fees and price manipulation. It is necessary to know that the service, for example, was used by an adult, noted Dmitry Seregin.
The press service of Yandex, which offers the Split service, then reported that the BNPL market is still in an early stage of development. And if the purchasing process through such services becomes “heavier”, becomes more difficult for the user, this could critically affect the convenience and, as a result, the future of the entire market.
“This can also become a negative factor for sellers, including representatives of small and medium-sized businesses. For them, BNPL is a tool to increase sales and attract new audiences,” they explained.
What options are being considered?
Currently, two models are still being considered: paid and free installments. The first is actually a loan and should be regulated as such. “Therefore, professional lenders should offer such payment plans in the form of consumer loans or loans,” says the Central Bank.
For example, in these relationships the consumer is not protected, since an agency contract is concluded. The regulator added: the amount of the fine in this case is not limited by anything, the conditions, which is important, can change, and the cost of the service is not always transparent.
“As for free installment payment plans, we consider it possible to discuss the provision of such a service by specialized installment payment operators,” says the Central Bank, “in this case, certain limits should be established that do not generate risks for the financial situation of”. a particular person and for the financial system.” That is, the consumer must understand the consequences. And uniform rules are needed to provide such installment plans.
If a person borrowed an amount exceeding a certain limit through installment payment services, this may be taken into account in the credit history, but is not excluded by the regulator.
