Friday 13 March 2020
Overdone it on swish clothing or swanky appliance purchases this month via a Buy Now Pay Later (BNPL) app like Afterpay or Zip Pay? Take solace in the fact more Australians are joining you in this instant gratification shopping spree.
Financial technology global leader FIS has released a report detailing recent shifts in worldwide payment methods, online and at physical checkouts, and they’ve noted a stark rise in Australia’s BNPL purchases.
The Worldpay from FIS 2020 Global Payments Report shows BNPL schemes, which allow you to spread out repayments over regular (often fortnightly) installments, are the hot spending ticket for 2020 - and beyond. Raw data from the report reveals the market share of this payment method has increased from 3% of all eCommerce transactions in 2018 to 8% in 2019, and is forecasting just over double that growth again by 2023.
If 17% of online transactions will be happening via BNPL in three years, that means about one in five - more than 4 million people - will be using it as their preferred payment method across the country.
The appeal of it is, generally, convenience. Up-front payment isn’t required when using BNPL, and repayments are made in even installments that are (ideally) easy to manage.
It’s also a sign that, at least in the online world, we’re swinging away from credit and debit card spending. The report data shows a forecasted downturn from a combined 2019 credit and debit card eCommerce market share of 46% to just 28% in 2023. Mozo’s 2019 report also recorded almost half of respondents giving their credit cards the flick in favour of BNPL services.
Cash and cards still rule in-store though, dominating point-of-sale purchases at 87% in 2019 with a less dramatic forecasted dip to 79% in 2023.
With great convenience, comes great responsibility. While BNPL speeds up and smooths out the purchase process and can assist in long-term budgeting, there are problems to consider as a prospective user.
Mozo Director and Money Expert Kristy Lamont says, while these services are useful for budgeting when you’re not flush, assumptions that you are making a ‘no strings attached’ purchase aren’t always accurate.
“Since ‘buy now pay later’ doesn’t have the ominous word ‘credit’ associated with it, many shoppers think they won’t get stung with late repayment fees or that credit ratings don’t come into it. That’s not the case.”
Lamont advises shoppers to watch out for three major BNPL pitfalls:
Want to know more about the recent BNPL news? Head over to our fintech hub for all the latest developments.