After a year of massive growth in buy now pay later (BNPL) sales, demand for services such as  Afterpay and Zip may have reached its peak following a slowdown in the September quarter.

Even despite the recent drop-off, BNPL sales are up 9.9 per cent since this time last year due to a post-COVID surge, new data from credit analytics company Equifax shows.

“The changing market perception of the buy now pay later sector, driven by ongoing turbulence and regulatory discussions, may have contributed to softer growth in demand this quarter,” Equifax general manager Kevin James said.

“Additionally, consumers have had more opportunity to shop in ‘bricks-and-mortar’ stores this year when compared to Q3 2021, and may choose different payment options when shopping in-person versus online.”

This won’t be welcome news for BNPL shareholders who have already experienced massive declines in share prices as a result of rising inflation and interest rates.

Shares for Australian BNPL company Zip are down 90 per cent since this time last year while Openpay is down 85 per cent over the same period.

In contrast, credit card sales grew strongly last quarter, up 31.5 per cent since last year.

Despite the BNPL downturn, the Equifax data shows no sign retail spending is slowing, although the increase in demand for consumer credit could indicate high inflation is eroding household savings built up during COVID.

Figures from the Australian Bureau of Statistics show a record 19.2 per cent increase in retail trade over the year to August, in defiance of rising cost of living pressures.

-AAP