The corporate watchdog will look into any potential risks to shoppers from the boom in buy now, pay later platforms such as Afterpay, as consumer groups worry these services escape laws designed to protect customers.

With buy now, pay later platforms eyeing strong growth in the peak Christmas shopping period, the Australian Securities and Investments Commission (ASIC) on Friday confirmed it was closely watching the fast-growing sector.

Buy now, pay later services such as Afterpay are being offered by more retailers in the lead-up to Christmas. Credit:Katherine Griffiths

Buy now, pay later schemes are like a modern form of lay-by for tech-savvy millennials, but with an important difference. Unlike lay-by, these services allow customers to take their goods home before they have paid for them, paying the merchant back over fortnightly instalments.

The largest provider, Afterpay, does not charge interest, so it is not covered by consumer credit laws. It makes about 80 per cent of its revenue from fees charged to merchants, and the remainder mainly from late payment fees, which are $10 per late payment and another $7 if the payment is not made within a week.