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Afterpay’s $39 billion payday

9th August, 2021

Recently, it was reported that Afterpay, one of Australia’s largest buy-now-pay-later (BNPL) providers has sold for $39 billion. Not bad for a company that launched less than seven years ago.

You might be wondering what this has to do with you? Well, if you are one of Afterpay’s 3.4 million active customers, you might be interested in how you have contributed to their incredible success story.

What is BNPL?

BNPL schemes allow you to buy goods or services, receiving them immediately, and pay them off over time. They don’t charge interest, but they do charge fees, for example if you miss your scheduled payments, and it’s easier than you think to lose track of your purchases.

How BNPL schemes are costing you

There are currently ten BNPL providers operating in Australia, with a couple of major new players about to enter the market, all happy to help you spend your cash. According to the Reserve Bank, in the 2019/2020 financial year BNPL providers processed more than $9 billion in payments.

Food for thought (according to an Afterpay April 2021 report):

  • In 2020, BNPL sales in Australia increased by more than 40% per month!
  • Customers spend more money in each transaction when they can delay payments.
  • Customers also purchase more often when their payments are spread over time.
  • Afterpay alone collected $67.7 million in late fees from customers in 2020.

Typical BNPL fees

Depending on the provider used, the size of your purchase, and the amount of time you have to pay, there are a range of fees you might be slugged with:

  • Monthly service fees – usually charged by providers that allow you to make larger purchases and pay it off over a longer period of time. Account keeping fees and payment processing fees could cost you a combined $8 – $10 a month.
  • Late payment fees – charged if you don’t make a payment by the due date. You could be charged more than one if you continue to default on the payment.
  • Establishment fees –charged by some providers to establish an account.
  • Service fees – charged by some providers to set up payment plans on larger purchases.

It’s estimated that as many as 1-in-3 BNPL customers have paid at least one missed payment fee. In some cases, the amount of fees charged on a larger purchase, could be more than you’d pay in interest if you used a credit card, so don’t automatically assume a no-interest option is a smart choice.

How to use BNPL wisely

BNPL schemes can be very convenient if used wisely but we recommend that you:

  • Don’t use them for discretionary purchases such as clothing and footwear that you can’t really afford.
  • Make sure you accurately budget for the repayments.
  • Limit the number of BNPL purchases you are paying off at any given time.
  • Ask yourself whether you would still make the purchase if you were paying for it up front, in full.

Remember, if you are not paying for a product, then you are the product.


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