Afterpay threatened by surcharges. Shoppers using Afterpay, Zip, Openpay or other Buy Now, Pay Later schemes could be forced to pay a merchant surcharge to cover the costs of the service. Currently, buy now, pay later operations such as Afterpay impose a ban on merchants charging their customers for using their service. The Reserve Bank’s Payments System Board revealed last week that it would investigate surcharging in the buy now pay later sector. The share prices of ASX-listed Afterpay and Zip have fallen dramatically since then. Afterpay issued a statement yesterday arguing against the imposition of surcharging customers for its service. Afterpay defends no surcharge policy. Afterpay says people using its service to pay for goods and services in store or online should not have to pay an extra surcharge. Currently Afterpay and other buy now, pay later services ban retailers and merchants from recouping the fees it charges them from their customers. The Reserve Bank of Australia prevented Visa, Mastercard and other credit and charge card schemes from banning merchant surcharging in 2003. Afterpay Touch shares have lost 22 per cent since the RBA announced an investigation into surcharge bans in th buy now pay later sector last week. Afterpay Touch yesterday told the Australian Share market that it delivers value to merchants and customers that extends far beyond the payment processing. Unlike credit cards, said the company in a statement to the ASX, Afterpay is a free service for customers who pay on time.” “Afterpay generates the majority of its revenue from merchants who choose to provide Afterpay as a service, rather than merely a form of payment.” Will Afterpay introduce fees for users? Afterpay is currently free for users, if they make their repayments on time. Afterpay makes money from merchant fees and late fees. Some experts claim that Afterpay users should be required to pay for the service, just like credit card users are often charged a payment processing fee. Payments consultant Grant Halverson said the buy now pay later sector needs to comply with the same rules as other payment methods. “You’d have expected the regulator to move on this before Buy Now, Pay Later sales got to six billion dollars,” Mr Halverson told Banking Day. “ASIC needs to move quickly to address the indebtedness of millennials,” said Mr Halverson, “who are more likely to be attracted to buy now pay later services. “In November ASIC highlighted that only one out of six BNPL providers were doing checks on new customers to see if they were creditworthy, that is astonishing.” LVR caps eased for investors paying interest only. Westpac group yesterday raised the loan to value ratio caps on interest-only mortgages from the previous limit of 80 per cent to 90 per cent, the same as CBA and NAB. NAB’s interest-only LVR ceiling of 90 per cent can be extended to 95 per cent on certain loan products. ANZ announced in March that it was raising LVRs on interest only investor loans to 90 per cent. Westpac said on Monday that LVR limits would be relaxed for new purchases and refinancings and will also apply to investors switching from principal and interest loans to interest-only terms. Cash Converters pays another $42m in compo. Payday lender Cash Converters has settled a second class action claim lodged by Queensland borrowers by paying $42.5 million to people who took out a loan between July 2009 and June 2013. In October 2018, Cash Converters paid $10.6 million to settle another class action brought by Queensland borrowers. In 2015 it paid $20 million to settle a class action claim brought by New South Wales borrowers over fees and charges. The class action lawsuit alleged that Cash Converter’s deferred establishment fee charged on loans was not lawful. Cash Converters wrote off an extra $5 million in loans earlier this year as bad or doubtful. Cash Converters reported bad and doubtful debt expense of $60.4 million in the year to June, up 90.5 per cent over the previous financial year.