There has been a bizarre debate in Australia on whether “buy not, pay later” services like Afterpay and Zip Money should be regulated. No surprise that some in the industry suggest not. Policy advisers and politicians, as well as the media, seem at sixes and sevens … distracted by what? Fintech gobbledygoop?

But it is essential that Responsible Lending and other rules be applied to products like Afterpay.

The services are obviously a provision of credit, even though the borrower is not charged interest if the debt is paid off on schedule. In essence, under the current model with “pay later” the interest is paid by all the retail consumers who do not use the service. This is a monstrous imposition, surreptitiously applied.

It gets worse. There seems nothing to stop retailers offering exclusive discounted prices to “pay later” shoppers, subsidised even further by those who pay up front.

Retailers who allow use of “pay later” services should be required to fully recover the cost of that service from a surcharge on prices paid by their “pay later” customers.

Of course, this is what also should have been required of retailers who allow use of credit cards. The sloppiness in regulation of credit cards at the purchase point is obvious. Some retailers do the right thing and apply a surcharge for use of a credit card (though it is hard to see how some surcharges line up with the likely actual cost to the retailer resulting from the use of a credit card). But the other retailers, who do not apply a surcharge for use of a credit card, are all implicitly transferring the initial cost of the credit provision to those customers who do pay up front. That is unfair and sneaky.