ASX BNPL shares soaring as industry regulations pushed back to 2024

Proposed regulations may see ASX BNPL companies face similar requirements to credit card companies.

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ASX buy now, pay later (BNPL) shares are trouncing the benchmark on Tuesday.

In late morning trade, the All Ordinaries Index (ASX: XAO) is up a healthy 0.7%. But shares in three leading BNPL companies are running even hotter.

Here's how the ASX BNPL shares are faring at the time of writing:

  • Shares in Block Inc (ASX: SQ2), which acquired Afterpay in January 2022, are up 2.4%
  • Zip Co Ltd (ASX: ZIP) shares are up 4.2%
  • Sezzle Inc (ASX: SZL) shares are up 1.4%

Here's what's happening.

What's boosting investor sentiment in ASX BNPL shares?

The pay by instalment industry looks to be catching some tailwinds today following news that new laws, intended to protect consumers from taking on too much debt, won't be introduced in 2023 after all.

The proposed laws, now pushed back into 2024, are likely to see buy now, pay later companies regulated in much the same way as credit card companies. Various regulatory plans, first proposed two years ago, have intermittently pressured ASX BNPL shares as investors weigh the potential impact to their business models.

But investors will now have to wait and see just what shape the new industry legislation takes. And just how much of an impact this may have on the future revenue streams of ASX BNPL shares.

This comes after Financial Services Minister Stephen Jones admitted the government won't get to the matter this year.

"We are going to run out of runway this year. We have been bombarded with stuff to get through parliament," Jones said (quoted by The Australian Financial Review). "Our drafting resources in the Commonwealth are stretched to the limit, especially for Treasury."

He added that investors can expect greater long-term clarity "early next year".

"That will be my objective to get it out there," Jones said.

While the delay looks to be good news for ASX BNPL shares, not everyone is happy with the government kicking the regulatory can down the road.

Consumer Action CEO Stephanie Tonkin noted:

We are worried about another significant uptake in these products in the lead-up to Christmas. Responsible lending laws remain desperately needed to reduce the harm caused by buy now, pay later products.

Foolish takeaway

Whether you pay cash, use a debit or credit card, or make use of the pay by instalment services offered by ASX BNPL shares, spend responsibly.

And don't forget to set aside a little money each month to invest in the stock market.

Over time, you'll be glad you did.

Motley Fool contributor Bernd Struben 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 and Zip Co. The Motley Fool Australia has positions in and has recommended Block. 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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