Buy Now, Pay Later (BNPL) services are on the rise in Australia. It is no surprise that major banks and corporations are exploring means to get a foothold in this fast-growing sector. BNPL services, sometimes referred to as “Point-of-Sale Loans” or “Point-Of-Sale Installment Loans”, allow shoppers pay for goods or services electronically in equal installment payments.Thank you for reading this post, don't forget to subscribe!
This short-term financing option is currently supported by thousands of partner retailers across Australia, both in-store and online. Some Australians consider Buy Now, Pay Later (BNPL) as an improvement over the country’s “Lay-By System”, where customers are allowed to purchase items in instalment and payment is scheduled over a period. The difference is that the retailer holds the goods until the customer makes the full payment before going home with it.
With BNPL, customers are only required to make a small upfront payment and the remainder is split into a series of equal installment. The flexibility of payment and prepayment period vary from one provider to another. While different companies have their own terms and conditions, they all allow payment over an agreed period, instead of paying the full amount at the point of sale.
Most BNPL providers claim they do not charge interest; however, some charge account keeping fee and they all charge a late fee when the prepayment period elapses. Popular BNPL providers in Australia include Affirm, AfterPay (now owned by Block), Brighte, Klarna, Openpay, Payright, Zip (Zip Pay and Zip Money), Latitude Pay, and Humm. Banks such as CommBank (StepPay), SunCorp (PayLater) and NAB (NAB Now Pay Later) also offer the same service while credit and debit card institutions like MasterCard and Visa are getting in on the action.
Apple has announced plans to enter the sector with Apple Pay Later while PayPal’s Pay in 4 is relatively new in the space too. There have been calls for the Australian government to come up with better regulation as the current credit policies does not adequately cover current BNPL services. As BNPL adoption rate keeps increasing (and credit cards declining), the government is already drafting policies which will come into effect before the end of the year or early next year.
Buy Now, Pay Later (BNPL) is a convenient solution for shopping, however, customers are advised to read the fine print and spend within their means to avoid accumulating debt in the long run.