Afterpay Raking $28M a Year from Late Fees

dcep on 30/08/2018 - 14:42
Last edited 30/08/2018 - 14:45

"Afterpay is raking in millions at the expense of debt-ridden and vulnerable Australians.

As many as one-quarter of Afterpay users are suffering financial stress, with one in three admitting to missing at least one payment.

The National Debt Helpline is receiving an increase in reports from vulnerable consumers using the app.

Afterpay’s annual report revealed that the company’s late-fee earnings rose by a massive 365 per cent, to $28.4 million, in one year alone.

About one-quarter of its income now comes directly from late fees, with the remainder from retail sales commissions."

https://thenewdaily.com.au/money/consumer/2018/08/24/afterpa…

Financial

Related Stores

Afterpay
Afterpay
Third-Party

Comments

  • EndM11 on 03/09/2018 - 00:31

    How big do we think a company like Afterpay can become before they get regulated or hit with some special tax?

    • HighAndDry on 04/09/2018 - 22:07

      Same with any other company. You think Coca Cola Amatil could survive if governments started regulating junk food?

  • curtturtle on 03/09/2018 - 08:29

    Nothing more than a small-scale version of GE loans that had interest free periods. If you're dumb enough to us them, you probably shouldn't have money in the first place.

  • Aniseed Steed on 03/09/2018 - 10:13

    To all those who think: "Well, tough titties if you're too stupid to control your own spending and find yourselves in debt you can't pay, or in bankruptcy! Blame yourselves, not the companies that facilitated your spending!" What then would you say to the family members of these people - their spouses, children, parents, siblings, and everyone around them - who are suffering as a result? Think of the negative ripple effect that this creates in society - perpetuating and worsening economic inequality, and reducing social mobility.

    Unless you or someone you love has experienced unmanageable indebtedness, it can be hard to feel the problem's immediacy or relevance. However, empathy is something we can all try to develop.

    • hippyhippy on 03/09/2018 - 10:19

      From what I can see.. After pay is generally used for goods which are luxury items… So i have no sympathy if you get stung either fees. And I got no sympathy if the company makes any losses.

      • Aniseed Steed on 03/09/2018 - 11:12
        +1

        After pay is generally used for goods which are luxury items… So i have no sympathy if you get stung either fees.

        Afterpay can also be used to buy essential items, like a refrigerator from Bing Lee, an insulin pump belt from Diabete-ezy, dental care from Primary Dental Centre, or a wheelchair from WOW! Mobility.

        Also, I don't use Afterpay, so save your sympathy. No one is asking for sympathy, just empathy.

        • hippyhippy on 03/09/2018 - 13:57
          -1

          save your empathy, they are all luxury items. even that pump belt is just 30 bucks.

        • HighAndDry on 04/09/2018 - 22:08

          Would you rather Afterpay not exist and these people not be able to afford these items?

          Are you proposing to lend them money yourself?

    • Ughhh on 03/09/2018 - 22:41

      Perhaps we should ask the salvo, red Cross and other charities to use their budget to help these in debt people? They didn't have a choice in the end right..

    • HighAndDry on 05/09/2018 - 09:53

      I have empathy. I just don't empathize well with stupidity - that just turns into pity. If you think those people want my pity, well sure, they can have it.

  • alisso on 03/09/2018 - 10:50
    +2

    I find Afterpay and similar services useful for the same reason I find credit cards useful. The longer I get to keep my money, the more interest I can earn. If I can buy something today, and pay for it at the end of the month, or in fortnightly instalments, without paying late fees or interest, it's to my advantage to do it. Especially if it means I get the thing when I need it, or when it's on sale.

    Given the way most services like afterpay work, I'm surprised by the amount they're getting in late fees. If I use it as my payment method, I set it up for the payments to automatically come out of my credit card as they come due. I don't have to do anything from that point on to avoid late fees. I guess more people are making payments from their bank accounts?

  • Carmen Sandiego on 03/09/2018 - 13:50
    +1

    I get if you use AfterPay/ZipPay if you don't have a credit card/like payments spread out in bite sized bits.

    I ZipPay-ed my $350 tablet until recently because it was $40 every month I got direct debited.

    Could I payed the whole amount when I bought it? Probably. Did I want to? Not really.

    • Flying Ace on 03/09/2018 - 14:07
      +3

      That’s my experience too. I have zippay and Afterpay accounts and have never paid any late fees. I find it easier to budget for the specific amount every month or fortnight than pay for things in a lump sum.

  • treeman on 03/09/2018 - 14:10
    +1

    Knew this was bad for people from the start.

    Just had danger written all over it.

    My advice always has and always will be, if you can't afford it, wait, be patient and then buy when you can.

    The only loan I have ever had in my life is a house loan, even for my house loan I waited until I could save up 20%.

  • penguincat on 03/09/2018 - 16:22
    +1

    I have only used Afterpay once.
    It was to make use of a item that was on sale that would have sold out/returned to normal price before I had full amount 3 days after the sale ended. In the end I paid the entire thing off a day before the 2nd payment was due.

    I can see if it can be handy in my use but as everyone else says if you can't afford it it's best to wait. (funny thing was if I had waited I could have gotten it cheaper a month later.) :(

  • dylan345 on 03/09/2018 - 22:06

    What I wanna know is how much of the debt is unrecoverable.

  • umoddbro on 03/09/2018 - 23:29

    What happens if you don't pay your late fees etc, can you default?

    • apptrack on 04/09/2018 - 09:09

      Eventually gets sent to credit reporting agencies

  • tap on 03/09/2018 - 23:41

    $28 Mil? Anyone want to start ozbargainpay with me?

  • meumax on 04/09/2018 - 10:27

    Humans are stupid. Afterpay facilitates their stupidity. It's also self sustaining.

    If Afterpay didn't exist, stupid people couldn't buy things they couldn't afford as easily. Now that it exists, it is easier for people to buy consumer goods they can't afford. Other people then see these people with these consumer goods and feel they must have them too thus creating more potential users for services like Afterpay.

    Let me tell you, it is hard to be responsible with money when you are surrounded by friends brandishing luxury goods. In your mind you know it is all funded by debt, but it's still hard to shake the feeling you are missing out.

    • Tasmaniac on 05/09/2018 - 16:11

      Humans are stupid. Afterpay facilitates their stupidity.

      Silly humans.

  • mini2 on 04/09/2018 - 13:40

    Afterpay/Zippay things, use payday loan to pay them off and then flog the items bought via Afterpay/Zippay to Cashies - keeps the retail trade chugging along just fine. What a wonderful circular flow of cash at a pretty high velocity.

  • paloverde88 on 04/09/2018 - 23:28

    I now know why Jb hifi refused to accept afterpay. Well all their sales would be on afterpay!

  • TailsK on 05/09/2018 - 11:57

    Afterpay is a great service. It super easy to use and makes a lot of sense for a lot of people. It's especially good in the way that it splits the repayments over 8 weeks for you. In my case, it let's me spread a purchase over two pay cycles, not because I don't have the money, but because it keeps more money in my bank account for a longer period of time. Why not keep the money in your offset account, rather than giving it to a retailer, if you can wait a month or two and still have your product?

    ZipPay, while similar, forces you to setup your own repayments, which I believe is by design, which leads you to inadvertently pay fees, regardless of you intentions to pay back the money. I don't use this service.

    People need to take responsibility for their own spending. If you can't afford something, or know you can't pay it back, don't by it. Simple.

  • Homr on 05/09/2018 - 15:08

    So I bought afterpay share at $21.50 and now it has plummeted down to $16.70 at time of writing. Anyone think I should sell my shares and cut my losses or hold?

    • cloudy on 08/09/2018 - 05:26

      $15 from I can see today. Would have saved yourself 10% if you just did what you proposed. Never too late

      • Homr on 08/09/2018 - 08:43

        Yeh :(

      • Homr on 10/09/2018 - 12:50

        APT just went from $15 opening to currently $16.45

        • cloudy on 17/10/2018 - 21:01

          Wondering if you are still holding?

          • Baysew on 17/10/2018 - 21:05

            @cloudy: $11.35 at close of trade 17/10/2018.

          • Homr on 17/10/2018 - 21:42

            @cloudy: Yes I was holding :(

            $4K loss on this share alone.

            • cloudy on 18/10/2018 - 06:49

              @Homr: I once had a share where I felt like I should have sold after losing 2k. I was hoping it would go back up, it did a little but then down some more.
              3k loss, I then had the same hope and would sell at a 2k loss, but it went down some more.

              The story went on, I ended up selling at over a 8k loss. My lesson learnt is it’s never too late to cut losses.

              There’s an inquiry into afterpay lending loopholes, I can’t imagine it’s gonna say afterpay is your friendly neighborhood salvo.

              • Homr on 18/10/2018 - 09:45

                @cloudy: I get what you mean. But I've also read that never to panic sell~~~~, so yeh…..dunno what to do :(

                btw, what share did you own???

                • cloudy on 18/10/2018 - 11:15

                  @Homr: I am still holding my baby bunting shares, but they are fully valued right now, so I won’t go jumping into them. They were good when I talked about them a few months back. Not anymore.

                  I also own a company called kangaroo plantation timber. KPT, I wrote about it before, so search some of my old comments, but it’s essentially binary bet on SA government approving a wharf to allow it to monetise its vast timber.

                  Which is a good risk reward bet, IMHO.

                • cloudy on 18/10/2018 - 11:18

                  @Homr: Panic selling, refers to not selling due to panic of the markets. Ie, macro events that spook vast wide spread selling.

                  When one stock or industry gets attacked (for a lack of a better word) it’s not panic selling, its realisation more regulation is inevitable. See AMP as an example, and banks, they are not falling just because of the stupid trade war by trump, they are being sold because the days of getting away with their actions are over.

  • R4 on 05/09/2018 - 18:07
    -2

    Don't use Afterpay if it's not for you - and if you do use them, don't pay late. What's so hard to understand

    I earn a really good income and have no debt but I also use Afterpay. It doesn't cost me anything, so why not?

    I've studied a lot of economics and one of the most powerful concepts in economics is opportunity cost - what benefit do you miss when you spend your money on an alternative. So, at no extra cost to me, I can buy something, pay an initial payment and keep the rest of the money in my account offsetting my mortgage until I need to pay Afterpay. I benefit, the retailer benefits and Afterpay benefits.

    Easy peasy Japanesey

    • M1ndFu7 on 06/09/2018 - 14:16
      +1

      "The Only Thing Necessary for the Triumph of Evil is that Good Men Do Nothing"

      Agree that all consumer should be responsible with their purchases. However we must accept the fact that a large population even in advance country such as Australia remains prey (or "irresponsible" some may call it, different topic for another day) to these type of businesses.

      However, it is still in our interest to ensure we help those who are enticed to make purchases they cannot afford. Who else pays the bill for Centrelink? The citizen/society who claims to be responsible pays.

      As i have mentioned a few times already, please regulate these businesses with process such as credit checks etc.

      • try2bhelpful on 06/09/2018 - 15:06
        +2

        Don't expect the "voice of reason" to work well here. However, regulation for this sector is important - and will probably come when enough people fall foul of the process. The problem is everytime Government tries to to protect people the industry finds another way to screw them by tweaking their fees and/or terms and conditions. I can't see afterpay pursuing people for small amounts of money, they will probably just not give the person credit again. I really don't see the point of afterpay unless you are living from paycheck to paycheck; in which case afterpay is probably not a great idea in the first place.

    • cloudy on 08/09/2018 - 09:08

      If you have studied Eco so much can you explain using macro theory how this is good for society.

      I know it is not good, it preys on the short term consumerism, creating friction in the economy for its profit. Merely being another middle man serving no economic benefit to society as a whole. But would love to hear your thoughts since its so easy peasy.

  • singingwolf on 08/09/2018 - 10:55

    their share price just took a massive hit

Login or Join to leave a comment
Login Join