‘Buy now, pay later’; time to believe in the hype?
Afterpay, Oxipay, Partpay and Laybuy. You may have started to hear these terms being thrown around recently. If you haven’t yet, then you certainly will do soon. What is it? What are they? Will these have any effect on me? Afterpay, Oxipay, Partpay and Laybuy are each a type of company that provides consumers with a ‘buy now pay later’ offering. No interest, no fees (to a point) all with the intention to encourage you the consumer another mode of payment method. A popular scheme already across the ditch, the trend is becoming more commonplace across the New Zealand marketplace, in-store and even more so online. Perhaps not as popular as the lime scooter craze but nonetheless just as exciting, the concept allows consumers the ability to buy products and pay for them later, in regular instalments. And while interest rates are not charged, the companies often charge penalty fees and infringements for the likes of late payments. The service is appearing to grow rapidly among a younger demographic (18-34) with this group making up over two-thirds of the ‘buy now, pay later’ customer base. This demographic is seemingly drifting further away from the credit card mode of payment, instead utilising debit cards and alternative means, namely buy now pay later schemes to fulfil purchase decisions. From a retailer’s perspective, the concept brings a new group of people who may otherwise not be willing or able to make a purchase. Before delving into the potential pros and cons of the concept and the services involved we will provide a brief summary of each provider below and a link to each company’s homepage so you can undertake further research and understanding of your own; Afterpay – is a digital service that makes it possible to buy something now and pay it off over four equal instalments, due every two weeks. Featured merchants include Trademe, Michael Hill, Hallensteins, Kmart, Country Road, Dotti. For more go to https://www.afterpay.com/en-NZ/how-it-works Oxipay – “is a flexible payment solution backed by FlexiGroup NZ limited providing customers with a smarter way to buy what you want now by splitting the overall payment over four easily managed payments (fortnightly).” https://oxipay.co.nz/ Oxipay featured merchants in NZ include Farmers, Briscoes, Rebel Sport, Whitcoulls among others. For more go to https://oxipay.co.nz/faq/ Partpay – you pay 25% for the product up front, then 25% instalments over the next three fortnights. Featured merchants include The Warehouse (online), Torpedo 7 (online), Beds ‘r’ us (online) For more go to https://partpay.co.nz/how-it-works/ Laybuy – allows payment over six weekly automatic payments. With Laybuy as opposed to the alternative options, you can choose your payment day and view a schedule for set payments. Featured merchants include Amazon, Briscoes, Glassons, Rebel Sport, Smiths City among others. For more go to https://www.laybuy.com/nz/how-it-works Further interesting points regarding these ‘buy now, pay later’ services.
- There are concerns that such schemes appear to normalise debt. The safest way to shop remains to save upfront so that you only buy what you need and don’t end up spending beyond your means.
- Australian consumers using buy now pay later services had increased five-fold from 400,000 customers in 2015-2016 to two million in 2017-2018. While the number of transactions had increased from about 50,000 in April 2016 to 1.9 million in June 2018. For more go to; https://www.interest.co.nz/personal-finance/97894/emergence-and-growth-buy-now-pay-later-services-has-caught-eye-competitors
- The New Zealand Government is looking at reviewing and regulating policy surrounding the buy now, pay later service offerings. For more go to; https://www.interest.co.nz/personal-finance/97786/minister-%C2%A0commerce-and-consumer-affairs-kris-faafoi%C2%A0establishing-new
- You can build a positive credit history by utilising these services. According to Laybuy; if you are a good payer and never miss a payment, Laybuy will report this information as part of its commitment to comprehensive credit reporting. For more on comprehensive credit reporting check out this guide.