Buy Now, Pay Later

Names such as Afterpay and Zip are very recognizable, being two of the big players in a market known as Buy Now, Pay Later.

It is a sector that is showing exponential growth in revenue and usage in recent years. No profit as yet……..!

Buy Now Pay Later is broadly marketed as a means for consumers to make a purchase now and then pay it off over a few months. Immediate gratification, which is the opposite of the old layby system, where the item could not be collected until the instalments had been paid in full.

Much has been said about its low cost to consumers, and that it is preferable to credit cards with the high interest rates. However, there is no such thing as a free lunch!  Costs can be significant if repayments are not met.

ASIC recently released figures which indicate that one in five users of Buy Now Pay Later are missing their repayments. Given that 60% of users are aged 18 to 34 and 40% are students or working part time, we have concerns that there is potentially a generation of young people heading into financial difficulties.

These companies take up to 7% from the retailer. So next time you purchase something in a store that has Buy Now Pay Later facilities, why not ask them for 5% discount if you pay cash or purchase with debit card? A win for both parties!