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.
