The Government wants to introduce better checks for buy now, pay later schemes to protect vulnerable Kiwis.
Buy now, pay later schemes are a rapidly growing form of short-term, unsecured credit used by consumers to pay for goods and services.
It does not charge interest, although late fees are charged if a payment is missed.
"This is the right thing to do," Commerce and Consumer Affairs Minister David Clark said.
"As the global cost of living crisis puts pressure on New Zealanders and their families, we are taking action to help them avoid unmanageable debt, especially as the Christmas season looms."
He said the sector has proven popular and grown quickly – the amount of money spent on these schemes in 2021 was $1.7b, compared to $755m in 2020.
A spokesperson for Afterpay says that it "has always advocated for regulation that drives strong consumer outcomes, is fit-for-purpose, and proportionate".
"Achieving the right regulatory balance will mean that consumers are not driven back towards credit cards and payday loans - products that profit from people revolving in debt."
The Government’s concerned the schemes are sending some people spiralling into debt.
The Government wants affordability checks for purchases above $600 – the same protection in place for borrowers' wanting to use credit cards and personal loans.
Smaller loans would not have to go through the same process, but comprehensive credit reporting will need to occur, Clark said.
Lenders would also be required to have a hardship process in place and belong to a dispute resolution scheme.
Consultation on the proposed changes is expected to open later this year, with final regulations made in 2023.
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