Yes, agreed. It may also test, if you are really serious with your application. If you are, there will be a way to free some time.

This goes both ways: companies blow time to interview candidates, who just want to see how far they get. Or who plan to negotiate better terms with their current employer (happened to us recently, we paid flight, hotel, lost 3 months and a whole application round).

Candidates blow their time by implementing stuff for companies, who just want cheap code or who want the best solution for a problem they cannot solve, or simply re-decide their plans after you invested your time for the coding.

Both sides should find out how serious the others are. Payment for code is a good step. But if you pay, you can also ask for something, right?