Fans of the Microsoft Store will be pleased to hear that they can now purchase new tech and avoid being hit with a big bill straight away. If you don’t want to, or simply can’t offload $1,000 in one go, then the option to split the payment into installments could be a welcome relief.
View Mozo's latest Buy Now Pay Later statistics report.Buy Now Pay Later (BNPL) has taken the digital payments world by storm over the past few years. In fact, the Reserve Bank of Australia reported that the value of BNPL transactions grew by 55% in 2019/20 and had more than tripled since 2016/17. These stats came from the RBA’s ‘Developments in the Buy Now, Pay Later Market’ March 2021 bulletin, which weighed up company reports from four ASX-listed BNPL companies: Afterpay, Zip, FlexiGroup and Openpay. According to the data, by December 2020 Australia’s two largest BNPL providers, Afterpay (3.4) and Zip (2.5), had almost 6 million active accounts* between them.
Despite Buy Now Pay Later (BNPL) slowly becoming the trendiest way to pay for everyday purchases, there is still a good deal of confusion around what it means for a user’s credit health. In fact, according to new research from BNPL company Openpay, 44% of BNPL users don’t understand how the service impacts their credit score. However, the research also found that Aussies are generally savvy with understanding why BNPL companies perform credit checks before approving users for an account. Openpay found that 76% of users know that BNPL companies can conduct a credit check to assess a customer’s affordability, while 77% understand that applications for BNPL will appear on their credit report. Interestingly, more than half (62%) of respondents believe that every BNPL company uses the same affordability assessment, which is untrue. "Credit checks and credit scores are a confusing element of the financial system for everyone, particularly when you add cash flow management solutions such as buy now pay later to the mix alongside traditional forms of credit," said chief operating officer at Openpay, Theresa Abela. When it comes to building a healthy credit score with BNPL, it seems we still have ways to go. A massive 85% of Aussies believe missing a payment can negatively impact their credit score, while 62% think paying on time via their credit card will help boost their score.
From Afterpay to Zip, Klarna and every Buy Now Pay Later (BNPL) company in between, it seems Aussie shoppers can't get enough of splitting up purchases. In fact, Mozo research has found that 5.8 million Australians have at least one Buy Now Pay Later account. But ever since BNPL hit Aussie shores, there's one question that still remains for almost all BNPL users: will it affect my credit score? One of the biggest reasons BNPL services have surged in popularity over the past few years is that it promises interest-free shopping with little to no fees.So why would the average Aussie be worried about this service affecting their credit score if no interest is involved? Well, like most personal financial products, it's all in the details. To give you the inside scoop as to whether signing up to a Buy Now Pay Later platform could impact your credit health, we've compiled this handy guide to help you.
CommBank has just become the latest company and the first major bank to enter the Buy Now Pay Later (BNPL) market. Similar to other BNPL products, customers can split up their purchases into four equal fortnightly instalments for transactions above $100. In order to access the service, customers will need to link it through their CommBank bank account. Other notable features of the CommBank BNPL product include:
Digital payment giant PayPal has today announced it will be venturing into the Buy Now Pay Later (BNPL) space. Similar to other BNPL companies, PayPal’s product will allow customers to have a limit of up to $1,500 for transactions, which can then be paid back in four equal instalments interest-free, with the first instalment being paid at the time of purchase. There is a $10 late payment fee, which is capped at $30 for purchases over $125, or $10 for purchases under $125. As the product does not charge interest, it will not be regulated under Australian credit laws. However, Toon says the company will be conducting extensive background checks on customers to ensure appropriate applicants are approved. PayPal is also looking into the new BNPL Code of Practice which was released last Monday. “PayPal has developed a reputation over many years as being a responsible payments platform, and that is absolutely the focus of what we’re looking to achieve through the entry into the buy now, pay later space,” said PayPal Australia’s general manager of payments, Andrew Toon. According to Toon, the decision to launch the BNPL product came in response to the high volume of requests the company received from its Australian business customers. “They’re looking for us to be able to deliver choice and flexibility to their customers in the PayPal checkout,” he said. The PayPal BNPL product was already launched in the US last year with huge success. “In six months in the US, they got 45 million BNPL customers with the same product,” said chief executive of payments consultancy McLean Roche, Grant Halverson. “They would be the biggest [BNPL] threat to come here.”If you’d like to find out how PayPal’s new BNPL product stacks up to other offers on the market, head on over to our comprehensive Buy Now Pay Later guide or our in depth Buy Now Pay later statistics report.
Fintech lender Plenti (formerly known as RateSetter) has launched a brand new interest free option for Aussies looking to invest in renewable energy technologies, such as solar panels and batteries. Customers who apply for the Buy Now Pay Later (BNPL) product will be able to pay off their investment within 3 to 6 years, or up to 72 monthly instalments. As mentioned, the product is interest free, however customers will be charged a fixed $6 monthly fee to cover the cost of accessing the loan. In case you weren’t aware, the BNPL model allows customers to purchase items upfront and pay them off in either fortnightly or monthly instalments without incurring any interest. According to Plenti, the initiative is already off to a positive start thanks to its pilot program that was rolled out three months ago. The lender found that solar applications through these selected partners jumped by 80%, compared to the average demand in the last six months. “The fact that so many green home Aussies want to invest even further in solar is a huge positive in times of economic uncertainty,” said head of renewable energy finance at Plenti, Louis Edwards. “To me this shows more people are realising the technology curve we are on, the benefit with new products like home batteries and the need to get in early to invest in their home energy future.”
Over a year ago, there was talk of a new Code of Practise major Buy Now Pay Later (BNPL) companies were expected to sign. Today, that code is now officially in business. Developed by the Australian Finance Industry Association (AFIA), the Code of Practise sets the best practise for BNPL, while ensuring customers are protected. According to the AFIA, the Code is a ‘world first’ for the BNPL sector and will aim to go above standard Australian law.“From the get go, strengthening consumer protections across the sector was a focus for AFIA and its BNPL members. The Code is explicitly consumer focused and has nine commitments that signatories make directly to the people that use their products and services,” said AFIA chief executive Diane Tate. Some of the obligations Buy Now Pay Later companies must abide by include forbidding customers under the age of 18 from using the service and prohibiting users in financial hardship from making additional purchases on the platform. Other rules include capping late payment fees and conducting customer checks before they approved for the service.
For many Aussie shoppers, using Buy Now Pay Later (BNPL) at the checkout has become as common as paying with a debit card. In fact, Mozo found that 5.8 million Aussies have at least one BNPL account. But if you are one of the few who are yet to take this innovative payment method for a spin, it’s important to understand how to use it correctly. To get you off on the right foot, we’ve jotted down some do’s and don’ts of using Buy Now Pay Later.