‘Bill’ Now Pay Later: Is it a good option post-JobKeeper?

There are so many Buy Now Pay Later platforms around these days, it would be surprising if you hadn't heard of at least one. Think Afterpay, Zip, Klarna and Payright. The question is have you come across the 'Bill Now Pay Later' concept?

The name is pretty much self explanatory: a Bill Now Pay Later platform pays a bill for you and you pay back the platform in instalments. It's pretty similar to Buy Now Pay Later, except for it's solely for paying bills, not for shopping. Let's have a look at who offers Bill Now Pay Later and how it might help Australians experiencing income loss post-JobKeeper.

Who offers Bill Now Pay Later?

Right now payment platform Deferit is pretty much leading the charge with Bill Now Pay Later in Australia. In fact, the fintech recently reported that it had paid 600,000 bills for Australians since its launch in 2018.

A third of those were processed in the last five months alone. Deferit chief executive, Jonty Hirsowitz puts this surge in interest down to the pandemic and the announcement of the end of JobKeeper.

"What we've seen is that more Australians are turning to Deferit as an avenue of support as they are forced to become more strategic about the way they manage their bill payments over each pay period," he says.

So it would seem that Australians are turning to Bill Now Pay Later as a budgeting solution post-JobKeeper. But how exactly does Deferit work and is this payment method really a good option for Australians struggling financially?

Deferit: The basics

You can sign up for Deferit online or by downloading the Deferit app. There is a $5.99 monthly account fee, but according to Deferit's website you will not be charged this if you do not have any active bills to pay. If you're not actively using the account at any time, then it pretty much lies dormant and you won't be charged.

The maximum bill balance Deferit will give to customers is $2,000. That means that at the most, Deferit will pay $2,000 worth of bills for a customer at any given time. Emphasis should be put on 'maximum' here, however, as this figure will vary from customer to customer. For new customers Deferit says it will generally give a much lower bill balance of between $300 and $500.

On top of this, the fintech says it will also review customer's activity and credit history when assessing individual bill balance allowance. In other words, if you make your instalments in a timely manner, Deferit may increase your maximum balance. Once you defer a bill, you will then have to pay it off in four fortnightly instalments. It should also be noted that for all card payments to Deferit you will be charged a 1.5% fee, plus a 20c processing fee.

How much do you wind up paying?

Paying big bills in instalments is nothing new. A number of institutions with big fees such as for tuition or seasonal theatre tickets will often give you the option to pay it all upfront or in quarterly instalments. With the caveat of course that paying in instalments will come with an administrative fee.

In this way, Deferit's fees are not too out of the ordinary. So if you were paying off one bill in four fortnightly instalments, it would take you around two months to clear it. That means you would pay at least two monthly fees - at least $11.98. Add to this the card processing fees of 1.5% per transaction and 20c each time (so 80c altogether) and you will wind up paying a bit more than you would have if you had had the money upfront.

The upsides to Bill Now Pay Later

Deferit user and business owner of a bridal store in Croydon, Melbourne, Jackie says that Covid lockdowns last year forced her to come up with creative ways to stay on top of her bills.

Jackie signed up to Deferit in October of last year and regularly uses it to pay utility bills, rates, phone bills and even some supplier bills for her business. She says, "For me, it is so flexible and convenient. I find it gives me a real peace of mind because I know I'm never going to be caught out with a late fee. I login to the mobile app daily to check where my finances are at and make sure that I'm always on top of what payments are coming up."

In this instance, Bill Now Pay Later has been beneficial in helping Jackie combat low cash flow during the pandemic. However, clearly budgeting is key. If you are going to use a service like Deferit, it is vital that you know what you will have to pay in the long run and whether or not you will have enough money coming in to make good on the fortnightly instalments.

If you are on top of all this and are savvy about making payments, platforms like Deferit could certainly be useful to avoid missing bill payments and incurring late fees. Although it should be noted that Deferit will not pay rent or credit card payments.

Want to learn more about the other format - Buy Now Pay Later? Head to our Buy Now Pay Later hub for all the latest news and insights. Or, if you want to save money, take a look at the savings accounts on offer below.