Afterpay slurs ‘hold my beer, watch this’ as it lowers the bar with lending at Aussie pubs

There’s a beautiful irony in a pub product failing the pub test, and that’s exactly what Afterpay’s partnership with the Australian Venue Co has done.

By Friday, in 160 venues around Australia, anyone over the age of 18 with a phone and an Afterpay account will be able to stumble up to a bar and spend money they do not have on something they’ll have nothing to show for, all without so much as a credit check.

Afterpay, which goes to great lengths to tell us “it can’t be used on gambling”, because that would be wrong, has stepped into the sticky floored ring of bars and pubs, where all Australians are well known for making responsible, well thought-out decisions that take into account long term consequences …

The reason many have condemned this latest announcement by recently-acquired Afterpay is because we’ve all been to a pub. We’ve all had a bit too much to drink and done something that we regret the next day. Whether it’s a drunk message to an ex, an accidental message to a boss; whether you’ve ruined your best shoes or you’ve punched a stranger. Maybe you’ve got behind the wheel of a car, or simply just considered it — we all know that being drunk is not the finest of our hours.

That’s why the idea of dispensing unchecked credit to drunks feels wrong. Why Afterpay thinks it’s less wrong than dispensing it to gamblers, I have no idea. In many ways it’s worse.

Sam Russell, co-founder of Klef (a platform connecting musicians to fans) believes “they’ve taken it too far by enabling it at the bar”. While Katherine Temple of the Consumer Action Law Centre said her organisation is already working with an increasing number of people struggling with BNPL debts.

“Often people are struggling with buy-now-pay-later debts on top of existing debts: credit cards, personal loans, even utility bills. So it can be a very complex debt situation that people are experiencing,” Temple told Guardian Australia.

Temple said this is “a really concerning development” given that “there are so many players operating in the space and they exist in a regulatory void”.

Armchair experts on Linkedin have rejected these concerns, with one bank employee saying “…whatever. Credit cards aren’t different though”.

Not surprisingly, the armchair experts are wrong. Credit card applications are done in advance, subject to strict responsible lending laws, and measure a person’s ability to service the full line of credit they’re applying for alongside their creditworthiness and consideration of their debts with other credit providers. Providers are also forced to comply with legislation to protect people in financial distress.

Afterpay, a huge fan of regulatory arbitrage, where one dodges and circumvents rules by finding shadowy loopholes to operate in, doesn’t have to comply with any of these responsible lending requirements. That’s why this really stinks  —  it’s bringing irresponsible lending to irresponsible Aussies.

Aussies expect the pub to act responsibly in its service of alcohol and we expect credit providers to make sure they aren’t enabling us to get into trouble. Hell, we even expect responsible gambling laws. Handing us a loan at a bar without asking us if we can pay it back when we can’t manage to type a text message is one step too far.

Now that AfterPay has ripped the band-aid off processing high risk transactions, there’s no telling which exciting industry it will enter next. Will Australia’s leading digital-loan-shark-cum-high-risk-payment-processor perhaps consider adult transactions at brothels and porn sites, or will it perhaps court Australia’s lucrative gambling industry, targeting the massive number of Aussies struggling with another addiction? The opportunities are truly endless once you decide there’s nothing beneath you.

It’s time the federal government regulated these bad actors like they regulate every other form of credit. This is credit and it should be decided upon subject to standards and laws of responsible lending, not at a bar by someone seven drinks deep.