Commissioner's blog: Should you buy-now, pay-later?

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Business / companyConsumer

The way we shop may have changed forever following the COVID-19 coronavirus pandemic.

Life in lockdown meant cash transactions plummeted in favour of a number of contactless payment methods, including buy-now, pay-later schemes.

Often described as the ‘modern-day lay-by’, buy-now, pay-later arrangements allow you to receive goods and then pay off the amount in instalments further down the track. Unlike lay-by, the item is available to you straight away.

At the height of the pandemic, prominent buy-now, pay later business Afterpay picked-up 1 million new users and recorded its best ever quarter to June with $2 billion spent on buying goods and services. While Afterpay is the most dominant force in the market, its rivals include a growing number of similar platforms such as zipPay, BrightePay, Payright and Openpay.

Even though you can buy-now, pay-later – is it a good idea? The key advice is to check the terms and conditions before you sign up to any scheme. They are often promoted as “interest-free” but late fees, account-keeping fees or payment processing fees may apply.

For example, while you may make a purchase for $100, one late payment could cost you up to a further $17 plus any potential bank fee for a payment default.

A review by the Australian Securities and Investment Commission (ASIC) in 2018 found that one in six buy-now, pay-later users had become overdrawn, delayed bill payments or borrowed additional money. Most consumers reported that the option allowed them to buy more expensive items and generally spend more than they normally would.

Check out for tips on staying in control when you use a buy-now, pay-later service, including:

  • Plan ahead to ensure the repayments fit into your budget and other financial commitments.
  • Link your buy-now-pay-later account to your debit card instead of your credit card – that way you are using your own money and will avoid extra debts or interest.
  • Don’t overcommit – stick to a limit and only have one buy-now, pay-later at a time.
  • Contact your provider straight away if you’re having trouble making repayments.
Commissioner for Consumer Protection Lanie Chopping
Commissioner for Consumer Protection Lanie Chopping, by CP Media
Commissioner for Consumer Protection Lanie Chopping


Consumer Protection
Media release
20 Aug 2020

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