Buy Now Pay Later Companies in Australia: provider comparisons, how to sign up and tips to manage a BNPL account

Buy Now Pay Later (BNPL) has become a popular payment method for Australians in recent years. In fact, recent Mozo research suggests that a large chunk of Aussie BNPL users (42%) already have at least one account that they've been using for three or more years.

There are multiple BNPL providers available in Australia. If used responsibly, BNPL can be a helpful budgeting tool, but like any new money-related innovation, it’s important to understand all of the ins and outs before you sign up.

Buy Now Pay Later services allow users to purchase a product or service at a shop or online, and pay it back in interest free instalments. Buy Now Pay Later services allow users to purchase a product or service at a shop or online, and pay it back in interest free instalments.

Interestingly, this concept isn’t new. You might recall traditional ‘lay-by’ services, in which you pay for goods in two or three instalments, and do not receive the goods until the full price has been paid.

The difference between Buy-now-pay-later and lay-by is that customers who use BNPL services receive their items instantly and they make instalment repayments to the BNPL service provider, not the store that the goods are purchased from.

When you sign up to a BNPL company and are approved, you can either link your debit or credit card to your account. From there, you will be allocated an account limit, a fixed repayment schedule for future purchases and have access to the app where you can manage and make your repayments. 

To use it at the checkout, all you need to do is select Buy Now Pay Later as your payment method. If you are shopping online, you may be redirected to your BNPL’s website to complete your purchase. And if you’re choosing to use it in-store, you may need to make your purchase via a purchase code on the company’s app. 

With nearly every major banking institution having its own BNPL service now, many options for checkout simply require you to enter the number of a virtual card. In the case of PayPal Pay in 4, you will checkout as normal with PayPal and then opt for a Pay in 4 contract over your standard PayPal payment.

Regardless of the BNPL provider you choose, your repayments are then automatically deducted from your nominated bank account or card to a pre-determined schedule. Many BNPL companies also give you the option to make your repayments earlier.

More Buy Now Pay Later options:

• Humm: The Big Things account can go up to $30,000 over 3 to 72 months. Some fees to consider such as an $8 monthly fee when purchases are spread out over 10 or more payments and a $6 late payment fee. The Big Things account also has an account establishment fee which ranges from $30-$110, or a $29 repeat purchase fee applies if you've used Humm before. 

• LayBuy: Not to be confused with the old school lay-by, with BNPL LayBuy you can own what you want now and split up the payments across six weeks, interest-free. There’s a $10 late fee if a scheduled payment is declined. Shop online or in-store.

• Pay It Later: Shop like normal at your usual store and at the checkout select pay it later then set up an account and make your first payment. Pay purchases off in four instalments and similar to other BNPL platforms if you miss a payment a $10 late fee applies.

Credit cards with 0% interest instalment plans

Similar to the way that buy now pay later providers allow you to pay off purchases in instalments, a number of banks and financial institutions in Australia offer credit cards with 0% interest instalment options. Instead, most of these will require you to make a monthly payment, paying back your purchases gradually in the same way you would with a BNPL plan.

Here’s a look at some of these:

BNPL sounds like a handy payment method to have in your back pocket, but you might be wondering if there’s more to this service than meets the eye. As with any financial service, it's important to be aware of all of the pros and cons of Buy Now Pay Later.

Possibly the biggest pro of Buy Now, Pay Later is that unlike a credit card, you won’t incur any interest for your purchases. It’s also pretty easy to sign up and be approved for, as most platforms don’t require a credit check when you sign up, making it widely accessible for Australians over the age of 18.

It can be easy to manage as well, with many BNPLs featuring a smartphone app where users can manage their repayments, view upcoming repayments and purchase items. Some BNPLs, including Klarna and Afterpay, also reward users with discounts and coupons to various retailers or exclusive sale events.

But like any kind of credit or have now, pay later option, there is the potential to get yourself into debt or financial difficulty. It’s also worth mentioning that if you miss an instalment payment, most providers will charge you a late payment fee. The amount will depend on the BNPL provider but is usually $7-$10 on top of your instalment.

When you sign up for a BNPL account, you will need to link a bank or credit card account for payments. This means that it is important that you keep on top of the instalment dates and always have money in your account to make your payments. If not, you could be hit with a late payment fee by the BNPL provider as well as a potential overdrawn account fee from your bank.

Which is the best Buy Now Pay Later company in Australia?

This is up to you to decide, as the ‘best’ option for you will depend on how you intend to use your BNPL account.

In saying that, Mozo's expert judges weighed up 32 buy now pay later services to find the best options as part of the Mozo Experts Choice Awards. They determined the winners in terms of fees, flexibility and availability, across three different categories: Small Purchases, Major Purchases & Credit Card Payment Plan.

Here's which BNPL providers came out on top:

We also feel that it's important to ask everyday Aussies about their experiences and preferences when it comes to a service like Buy Now Pay Later. The Mozo People's Choice Awards are an annual survey of Australians to find out which brands and products come out on top. In 2023, Mozo asked 2,660 Aussies for their thoughts on Buy Now Pay Later providers to find out which were the popular picks.

Of 25 brands surveyed, these were the ones that stood out:

When choosing which provider suits you, it’s important to ask yourself things like whether you’ll be using Buy Now Pay Later for online shopping or larger purchases only. This is because some BNPL companies can charge fees based on the size of your purchase or may ask you to pay an ongoing monthly service fee.

You might also want to select a BNPL option based on their instalment schedule because it can guarantee you’ll make your repayments on time. For instance, fortnightly instalments might suit you best if you receive your pay check every two weeks.

If you’d like to find out which Buy Now Pay Later company could be the best pick for you, check out our handy BNPL breakdown.

How do I choose the best Buy Now Pay Later company?

To answer this question, you will need to ask yourself how you intend to use it. Are you only looking to use it once or twice a month? Will it be used for smaller or larger purchases? Are you comfortable with weekly or fortnightly payments? What kind of account limit do you need?

No BNPL company is the same, so it’s up to you to do your research and compare your options to find the service that’s right for you. For inspiration, you might want to start with our Mozo Expert's Choice Awards and Mozo People's Choice Awards - and to do your own research into the options available.

Which Buy Now Pay Later is the best for online shopping?

Since BNPL is a digital product, it’s hard to find a service that doesn’t mesh well with online shopping. One thing to keep in mind though, is that online retailers may not accept all BNPL services, so be sure to make sure your BNPL payment will be accepted before you checkout.

Which BNPL is best for expensive items?

One of the great things about having a range of BNPL companies in Australia is that there is an option for every kind of shopper. If you are planning to use BNPL for larger types of spending, here are three companies to look at:

Humm:

• Account limit of between $2,000 to $30,000 (for Big Things)
• Number of instalments depends on the size of the purchase 
• $8 monthly fee for purchases that require more than ten instalments

Openpay:

• Maximum account limit of $3,000 
• Weekly or fortnightly instalments 
• Establishment fee may be charged based on the size of your purchase

Payright:

• Maximum account limit of $10,000 
• Establishment or service fee may be charged (depending on purchase size) 
• Credit check performed before purchases are made

Which Buy Now Pay Later is the best for electronics?

Generally, BNPL companies have a store directory available on their website that displays every retailer that accepts the service as a payment method. These lists allow you to filter through categories, like fashion, beauty and even electronics, allowing you to determine the BNPL that may be best suited for your spending needs.

For instance, some of the electronic retailers that accept Afterpay include:

• Kogan
• Bing Lee
• Big W 
• Godfreys

How are Aussies using Buy Now, Pay Later?

There are many ways to use BNPL, whether you opt for online or in-store. According to Mozo's research, customers are primarily using these types of platforms to buy things like clothing and shoes, making up 28% of BNPL purchases. Although fewer than the number of people in headline categories, a portion of the population uses BNPL to pay for more critical services, like bills or utilities (6%) and medical expenses (3%).

For more of the latest stats and BNPL trends check out Mozo's 2022 Buy Now Pay Later Report.

Does Buy Now Pay Later impact your credit score?

Typically? No. But it can if things get out of hand.

Additionally, some BNPLs have the right to report any negative actions on your account, such as missed payments to credit agencies, which can leave a mark on your credit history.

There is growing regulation in the Buy Now Pay Later space, and money spent on BNPL should be treated as borrowed money until it has been paid off - missed and late payments can have a lasting influence on your future borrowing power.

Can I use Buy Now Pay Later services anywhere?

Buy Now, Pay Later is widely available in Australia and can be used either in store or online, however it’s worth noting that not all retailers accept BNPL as a form of payment. And for the retailers that do, they might not allow all BNPL platforms to be used. For instance, at online store The Iconic, only Afterpay is permitted.

Because Afterpay is one of the largest BNPL companies, it is an accepted payment method at almost all online and in-store retailers.

Most stores will have the BNPL options listed at either the online checkout or at the register.

However, some BNPL companies, like Klarna and Zip Pay, have the infrastructure that gives customers the ability to shop at any store.

What kinds of fees and charges could I have to pay with Buy Now, Pay Later?

This will depend on the type of BNPL service you sign up for. While you won’t be charged interest some of the most common fees include:

• Monthly fees: Many BNPL services who cater to larger size purchases may charge a monthly account fee, which can range from $8 - $10 a month. 
  Late payment fees: This is a fee you will be charged if you miss a payment. It’s important to keep in mind that some BNPL services can charge more than one late payment fee if you continue to default on a payment. 
  Establishment fees: In some cases, you could be charged a one-off establishment fee to set up your account. 
  Service fees: For bigger types of spending, you may be subjected to pay a service fee, which is the cost to set up your purchase.

If you choose to link your credit card to your account and miss your monthly repayment, you could start to accrue interest on your BNPL spending. And if this becomes an unfortunate habit on your behalf, it could negatively impact your credit score.

What information do I need to provide to set up a BNPL account?

Every Buy Now, Pay Later platform will have their own requirements when a customer wants to set up an account, but we’ve jotted down the most common information you might be asked to provide:

• Proof you are over the age of 18 through a valid form of ID
• The details of your debit or credit card you want to link your account with 
• Your email address or phone number 
• Your billing information and address

A BNPL provider may also conduct a credit check. If you have a bad credit score and a record of not making payments, you may be rejected for a BNPL account or given a smaller credit limit to start with. It is possible to improve your credit score, so don't get dejected!

Can I trust Buy Now, Pay Later?

In January 2020, BNPL platforms were called upon to sign a ‘Code of Conduct’ issued by the Australian Finance Industry Association (AFIA), which would come into effect March 2021.

Inside the code are the minimum standards BNPL firms must practice as well as other guidelines around late payment fees, age restrictions and how to manage customers experiencing financial hardship.

However, ASIC says that as BNPL services continue to grow, more legislation will need to be introduced. As of October 2021, BNPL companies must comply with the regulator’s ‘design and distribution obligations’, which involves regularly assessing whether their products are a good fit for a customer.

In June 2022, New financial services minister Stephen Jones has confirmed that the government plans to bring in regulators to the BNPL market.

Is Buy Now Pay Later safe?

Like any new digital payment method that hits the market, there are often concerns around security. Let’s start with what personal information is collected.

Buy Now Pay Later companies like Afterpay, Zip and Humm collect things like:

• Your contact information: might mean your name, residential or business address, phone number or email address. 
  Your personal information: may include your date of birth, drivers license and other identifying information. 
  Your financial information: might consist of your bank account, credit or debit card details, current income and financial status.

To keep your personal details safe and secure, BNPL companies conduct frequent software security checks. Many also protect their customers through a two-factor authentication measure, which means two different passwords are required to access the account.

Tips for using BNPL responsibly

Although the idea of never having to pay interest might sound like a shopper’s dream, Buy Now, Pay Later users still need to use the service responsibly. To help keep spending under control while using BNPL, we’ve jotted down four, quick tips.

• Only use one platform: While Aussies may be spoilt for choice when it comes to BNPL, it’s best to only use one platform. Juggling multiple payments for different platforms can be tricky to keep up with and may see you spend beyond your means.
• Opt for a service with minimal fees: Many shoppers choose to use BNPL to save on costs, like interest. In this case, try to opt for a platform that charges minimal or zero fees for having an account. 
• Set reminders for upcoming payments: Although some BNPL platforms do send payment reminders to customers, it’s still worth setting up your own reminders to ensure you are not charged a late payment fee. You can do this on your phone or marking it in your calendar. 
• Be realistic about your repayment capacity: If you are planning on having multiple BNPL purchases on your account, just be sure you have enough wiggle room in your budget to do so.

What happens if I get into financial trouble?

Financial hardship can happen to anyone and it’s important to know what to do if you get into financial trouble managing your BNPL account.

Most BNPL platforms will have a financial hardship program, so your first step should be to get in touch with them as soon as you realise that you will not be able to make a payment. They might be able to help you to sort out a temporary solution based on your circumstance. Some options could include pausing or rescheduling repayments for an agreed time or waiving fees.

However, if your financial problems go beyond just managing your BNPL account and you’d like more assistance around managing money, a financial counsellor can give you free, confidential advice about how you can get things back on track. More information on free financial counselling can be found at MoneySmart .

If you're interested on the numbers around Buy Now Pay Later, you might want to check out our Buy Now Pay Later report page for further information.

^See information about the Mozo Experts Choice Credit Card Awards

^See information about the Mozo Experts Choice Buy Now Pay Later Awards

^See information about the Mozo People's Choice Buy Now Pay Later Awards