Tattoo BNPL platform INKPAY collapses, claiming new credit regulations will cut too deep

A buy now, pay later platform dedicated to tattoos has collapsed into administration, after claiming the cost of new regulations that treat BNPL like a traditional credit product will be too much to bear.

INKPAY, an Australian fintech allowing tattoo parlour customers to pay the cost of their tattoo over six weeks, entered voluntary administration on Thursday, according to documents filed by the Australian Securities and Investments Commission (ASIC).

Glenn Thomas O’Kearney of GT Advisory & Consulting was appointed administrator, with the first meeting of creditors scheduled for June 27.

Launched in 2019, INKPAY was among the first wave of BNPL providers with a dedicated product offering, as opposed to the retail-focused giants like Zip and Afterpay.

INKPAY has funded more than 50,000 tattoos since launch and is offered in more than 350 tattoo parlours nationwide, the company claims.

But the company this month announced it will no longer accept new customers and pause all new transactions, citing a suite of regulatory and economic factors constraining the business.

INKPAY said the primary cause is a government-led proposal to treat BNPL platforms as credit providers.

BNPL providers do not charge interest on customer payments, meaning they are not currently required to hold an Australian Credit Licence, or comply with the same Responsible Lending Obligations faced by traditional lenders or credit card providers.

That is set to change, as Financial Services Minister Stephen Jones last month announced the federal government will introduce legislation enforcing Australian Credit Licenses and compliance with Responsible Lending Obligations in the BNPL sector.

Further regulation will protect Australians from accessing BNPL debts they cannot pay back, Jones said.

If those regulations are passed into law, BNPL providers will need to move beyond their in-house customer assessments to more stringent credit checks and affordability tests.

The proposed legislation would be a significant change for INKPAY, which claims, “We don’t do credit checks, nor will we judge your past”.

“The INKPAY commercial model (and our smaller size) means we are unable to absorb the costs incurred in conforming to these regulatory requirements, and we feel it unfair and unrealistic to attempt to pass them on to merchants or customers,” the company said.

“We also believe the parameters of these checks and tests will be stringent and not allow for flexibility on a case-by-case basis, meaning many consumers will not be able to obtain access to BNPL services going forward.”

The broader macroeconomic environment which has constrained consumer spending and successive interest rate hikes have added to the company’s struggles, the statement read.

Tattoo parlours in the INKPAY network are now informing their clients of the situation.

Beyond the pause of new INKPAY transactions, questions remain over the status of the INKPAY NFT, a digital token promising discounted tattoos from parlours in the company’s network.

SmartCompany has contacted INKPAY and Glenn Thomas O’Kearney of GT Advisory for comment.