What Is The Advantage of AfterPay?

tik tok on 24/08/2020 - 14:36
Last edited 24/08/2020 - 14:36

I recently thought of checking out after pay - the way it works is if I use afterpay for a $100 item, I need to pay them 4 equal payments of $25 every week. If I have a credit card, I can still keep that $100 in a savings account, earn a few cents before the billing cycle and pay my credit card the same amount of money and even earn some points.

What is the advantage of AfterPay ?

If a person had the same amount of dedication towards payments, wouldn't just a credit card suffice ?
I understand afterpay as an option for people who don't have a credit card - out of choice. Other than this what appeals to people about after pay ?

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Comments

                              • brendanm on 25/08/2020 - 17:47

                                @Diji: Not at all, I know they would sell their sister if they could make $5, but they also don't want a heap of bad debt.

                                • Diji on 25/08/2020 - 22:07
                                  +1

                                  @brendanm: This is just anecdotal, I know, but some five or so years back CBA cleared a friend of mine on Newstart for a credit card. Not sure if that's the norm or not but the fact that they would do so at all is pretty silly.

                  • 91rs on 25/08/2020 - 18:10

                    @Hybroid: Lets not pretend the bulk of these people have much cash in their bank accounts to start with, thats why its an issue and they are turning to these options to buy whatever crap it is they need.
                    It would be very very few who have the cash in the bank and are doing something smarter with it elsewhere!

        • AustriaBargain on 25/08/2020 - 16:48

          You guys take a very dim view of your fellow man.

      • lunchbox99 on 25/08/2020 - 22:52

        but if you're buying everything on it, won't you just have displaced everything by 2 months and gain nothing beyond the first 2 months (ie it's a rolling window of credit).

        At least with a CC you have convenience - quick, not carrying cash, accepted for large and small purchases

  • daft009 on 25/08/2020 - 02:54

    Think it's split it, which allows you to charge the fortnightly payments to your credit card.

    Could be useful for some to split it over 2 cc billing cycles and earn some points at technically no cost to them

  • Euphemistic on 25/08/2020 - 09:23
    +4

    It’s just another form of credit to sucker people into buying stuff they don’t need or can’t really afford.
    Of course thee are some that take advantage and don’t lose anything by using afterpay, but at the end of the day it’s another business sucking money out of the retailer who will inevitably pass the cost in to the consumer. It is in your interest to pay the retailer via the cheaper method.

  • investastrix on 25/08/2020 - 09:34
    +3

    It's just another form or credit card. The retailer pays the fees for all methods except cash. Payments via credit/debit cards also incur fees to the retailer. The advantage with afterpay is that you just need to have 25% of the total in your account at the time of purchase. So if you see an item you want on sale and only 25% of the amount in your bank, you can still buy it

    The trouble is when people buy something without thinking about how its going to affect their finance in next 4 fortnights. I have a "spend on anything" budget of $50 per fortnight and afterpay has been useful for impulse buys. I only used it twice and ended up paying it off before the due dates though. The thought of debt however small makes it uneasy.

  • AssociatedPerfectShopper @ Afterpay on 25/08/2020 - 10:02
    +1

    I am NOT associated with Afterpay, even though the computer thinks I am. I think Afterpay is a great option if you are spreading out your budget weekly. I know a person who exploits every credit offer then doesn't pay them. Then complains non stop they can't get a loan. I recently got a NILS loan….excellent choice to get up to $2000 credit, goods delivered immediately and I'll have it all paid off in less than the year and can even refinance after six months. You also get half price fridges and TVs through it. I would prefer NILS over Afterpay as NILS are flexible if you can't make a payment. But Afterpay is an option I would use too. It does help you a lot - just don't abuse the privilege!

    • AustriaBargain on 25/08/2020 - 16:50
      +3

      Once you click the associate box, which is confusingly right above the submit button, you can’t unring that bell.

    • Zephyrus on 25/08/2020 - 22:52

      NILS isn't a competitor, it's a charity. That's why you pay no fees, are flexible and get better deals.

  • LFO on 25/08/2020 - 11:07
    +1

    What is the advantage of AfterPay ?

    Don't you have to provide quite a lot of personal information to AfterPay to get it?
    Even it is just your name and Credit Card details.

    That information is probably valuable enough to AfterPay to make the whole business worthwhile.

    NOTHING illegal, just the usual gathering and trading of clients information (as they ALL do).

  • Tigercjn on 25/08/2020 - 11:32
    +2

    None. Its made to make them money so it cost a lot of people a lot of money.

  • johnno07 on 25/08/2020 - 14:12
    +7

    The Buy Now Pay Later sector is booming because ecommerce is up thanks to COVID, and people are generally sh*t with their money even at the best of times and this is an easy way to spend what you don't have. Saying it's "easier" to pay for something with Afterpay" is generally a red flag for living beyond your means. Just because you have $1000 in your bank account, doesn't mean you should spend it. Breaking that expense up over 6 weeks doesn't change your financial situation appreciably, and only serves to as a mental disconnect between your purchase and your savings.

    In saying all of this - it's a great business model and I think they're worth buying into.

  • jason3w on 25/08/2020 - 16:28
    +7

    As a small business owner I'm holding out on accepting Afterpay.
    1. Due to their 6% fee to the shop owner. Compared to credit cards which was pay 0.7%. This is a huge cost to our business, eating into our margins.
    2. I don't like to encourage people to buy more than they can afford. Mind you, we do accept credit cards so that's no difference.

    I've been searching for a layby type arrangement that has people pay for their goods before getting them. It's a much healthier habit to build and there is zero risk for the business, therefore the fees could be zero.
    Looks like we might have to build an app if we'd like to offer this though.

    • biltong2go on 25/08/2020 - 17:38
      +5

      What kind of small business?
      For many businesses, there are various incentives to marketing.
      Firstly you get listed on the AfterPay website, so that (in theory) slightly boosts your SEO,
      and you may in theory get extra referral traffic.
      Next, you want customers to get into a habit of buying from you, so who cares if the first deal you lose 6%. In marketing there is a theoretical 'cost of acquisition', and for every sale you need to attribute a certain % to marketing and referral, so it's not unreasonable to apportion 6% to earning a new customer, especially if they come back a few times.

      However, there are plenty of exceptions, such as if you're selling a very competitive product with tight margins.
      Some sectors vary:
      retail clothing and some wines tend to have markups of e.g. 200-400%, so stores like the Iconic are only too happy to, for example, give you same-day delivery on that dress that cost them $25 that they've sold to you for $250,
      whereas the restaurant selling a hamburger for $9 with 5 competitors around the corner can't afford to lose another 6%.

    • Zephyrus on 25/08/2020 - 22:56

      Layby is really only useful if you have sales or limited stock. Lets you give people the option of locking in the sale price and (effectively) paying when they have the opportunity, or when you have stock.

      Afterpay will someday soon be forced to allow merchants to pass on the fee, I can see them losing a lot of value that day.

    • cloudy on 26/08/2020 - 23:34
      +4

      Thank you for not accepting AP.

      I know once a business starts accepting AP, inevitably they will have to increase prices to cover the cost. As you, and others have said, an extra 5% is an expense that falls straight to the bottom line, with most business earning a very small %, 5% can be all their profit if all their customers use AP.

      To people who use AP, imagine if GST went from 10% to 15% on your receipt, would you be happy about that if that extra 5% went to company instead of the schools/hospitals/ etc. all so you can delay your payment of goods for a few weeks?

      I've told my wife, if a shop accepts any BNPL, ask for a cash or EFTPOS discount.

      I was reading the financial report of Zip pay, they process $2 billion and earned Revenue of almost 200mill in that period. thats almost 10% taken from retailer/customer.

      If those business and zip users all used EFTPOS instead, that's about 180mill saving. Mind boggling, given AP is like 10x the size of ZIP, add in Openpay,Sizzle,Humm, etc etc… skimming from the transaction is big business for BNPL. Society stands to lose out

  • hipsipkip on 25/08/2020 - 16:38
    +3

    As a sophisticated investor I could afford a 2015 Toyota Camry a year ago, now I can divest into a high-yielding Mercedes AMG.

  • CocaKoala on 25/08/2020 - 16:45
    +1

    What are the advantages of getting mugged?

    If I cannot afford something, I do not buy it with a credit card or any other means of credit. I do have multiple credit cards that I use in order to make the most of things like frequent flyer points. However, I normally pay off that amount I used on the card most likely on the same day, or after it appears on my card statement online. The credit card statements I get sent will typically look like this:

    • Debits: $700
    • Credits: $640

    While it looks like I owe them $60 in the next 45 days or whatever the interest free period is, I would have actually settled it already but the statement doesn't reflect it because it was likely generated a day or two before that.

    The only exceptions to take out a loan will be:

    • a car loan - in my case, I lease a car every two years or so
    • a housing loan
    • a business loan or something else similar
    • Peza on 25/08/2020 - 17:31
      +12

      As a long term lurker, i though i should add to this from a retailers perspective.
      Credit card fees around 1-1.2% +20c
      Afterpay and Zip arounf 5.5%-6.6%
      So yes we have needed to increase prices to offset the larger cost of the transaction.

      Afterpay accounts for almost half of the sales now, and given we sit on 15-20% margin, we simply could not sit on losing 5.5% to 6.6% of the transaction value. This really has not added to total sales, just replaced the method of payment.
      For clarity, our products start at the $100 mark.

      Happy to hear from other seller to see what they are being charged.

      • gromit on 25/08/2020 - 17:54

        I have to ask, if it isn't increasing your sales and it cuts into the margin or increases prices then why support it as a payment method?

        • Peza on 25/08/2020 - 19:06
          +2

          Simply that we dont want to lose the sale to a competitor..
          Customer have options, and if the preferred way to pay is Afterpay, then we have to offer it..
          If I lose half of my Afterpay sales, then there is a decent chunk of business.

          We aim to make the experience as easy for the customer from service, to product and payment methods.

          We have had to consider approx a 3.5% transaction fee on products to cover the costs

          • gromit on 26/08/2020 - 07:33
            +1

            @Peza: So you are saying people would not buy from you without afterpay as an option? fair enough, wonder though is that an assumption or did you actually see a fall in sales prior to supporting afterpay?

            Personally I use afterpay at the moment where it is supported for the bonus points but it has zero affect on my decision or what or where to buy from. So for instance if I wanted what you are selling I would use afterpay as it benefits me more, but I would still purchase even if you didn't have afterpay.

            • Peza on 26/08/2020 - 13:10

              @gromit: Gromit,
              Our business is relatively new (commenced in 2017)
              We got on board with afterpay about a year ago as we saw its growth in retail.
              There was no fall in revenue as we are experiencing increase on sales year on year, partly organic growth, but I fell that Afterpay has been a benefit..

              As I said in my original post, over 50% of our sales utilise Afterpay as the payment method at checkout.. It is not a risk we can take by not offering it.. It just means the costs need to be passed on…

              • gromit on 26/08/2020 - 16:32

                @Peza: Understand, Not suggesting you are wrong. Was more interested to know if the drop had been seen or was just avoiding the risk of it.

                To put into perspective my parents business had the same with credit cards (15 years ago now), But what they did was picked a time of year with relatively modest but well known sales figures and then dropped support for credit cards for 2 weeks. At the end of that time they realised they did not need to even support credit cards and so phased them out and used the credit card fee as a business advantage against their competitors where they could cut more from the price.

    • Diji on 25/08/2020 - 17:38

      How come you lease a car?

      • CocaKoala on 25/08/2020 - 19:07

        I agree it's not hugely beneficial, but it helps a little bit with being able to write off some money as business expense. I'm probably going to do just as well with a car loan. But given things have changed drastically in the past 6 months or so, I will need to reassess to see if makes any sense now.

        • Diji on 25/08/2020 - 22:21
          +1

          Ahh ok, since you write it off as an expense does it actually work out cheaper than owning a car for a longer period of time? Or is it more that you like having a new vehicle and obviously buying one every couple of years is insane?

          Not judging btw, just curious.

          • CocaKoala on 26/08/2020 - 10:40
            +1

            @Diji: No, you are asking all the right questions.

            I don't buy a brand new car (I could, but I avoid), but many times it's a near new or a demo but always from a dealer (for GST). Whether or not it's going to be beneficial, and how beneficial will it be when it is, will highly depend on the income generated by business.

            The problem is that instead of keeping a watchful eye on these parameters I look the other way because I like the new car. I am not being smart there, I know. However, I'm okay because I don't notice the money that's going away there and I like the new car like I said. :-)

  • 91rs on 25/08/2020 - 17:01
    +1

    The part that concerns me is all of the perishable food items and similar you see advertised with an afterpay amount next to them on some sites.
    Sure its little different to paying for groceries with a credit card (if you've not got cash or EFT savings to use) but VISA and MC aren't out there saying oh this block of cheese is only $2.11 per payment over 4 payments with VISA! when shopping online.
    There seem to be lots of places who will do afterpay/zip on very small value items (sub $10), that seems really weird to me, it almost seems more predatory than traditional credit cards as its an ongoing debt for things that should just be paid for without having to be split over however many weeks.

    Surely its not a good look if you're going for finance for something bigger (car, house) that you can't manage small everyday stuff without having it setup to be taken out for you.
    Credit cards are fine (if you clear them before you pay interest) and I use mine like that just as it was easier, you get the points, you get some safety for online purchases and fraud and your other money can sit elsewhere before settling the most recent statement.

    I also hate things auto-debiting out of my savings \ everyday accounts.

  • mightyfes on 25/08/2020 - 17:06
    +6

    They are payday loans for people who can't get another credit card. They made it sound techy instead of scummy so people don't feed sad while using it.

  • gromit on 25/08/2020 - 17:18

    I have no need of afterpay, BUT I am using it at the moment for the bonus Qantas points. So I afterpay then just immediately pay it off.

  • Cluster on 25/08/2020 - 17:22
    +1

    The important thing to remember is that all 'Buy Now Pay Later' products are counting on customers being late with payments. From credit cards with their lovely 20% APR, to Harvey Norman's 1000 day interest free (plus fees and a whopping 28% if you fail to pay on time), to AfterPay.

    That's where the real money is.

    Of course don't default on the debt, but pay it back nice and slow after you've purchased too many items at 'only 4 payments, I'll have the money next month!'

    Then there's the real psychological factor that if you have to use your own money you will spend less. Any form of credit leads most people to spend more.

    • Zephyrus on 25/08/2020 - 22:59
      +4

      That's not where AfterPay make their money. They make it on merchant fees, that's their actual competitive advantage.
      They also force merchants not to pass it on, something that's likely to change and they'll lose a lot of business that day.

      • JuryWheel on 27/08/2020 - 12:58

        Yep, but I think they are too well integrated into online stores to do anything about it now..

        • Zephyrus on 27/08/2020 - 13:08

          Those businesses pass it on. Customers who have money will choose not to pay an extra 5-7% of whatever, leaving only those who can't afford it otherwise.

          • JuryWheel on 27/08/2020 - 14:07

            @Zephyrus: I know some have passed it on in the pass (eg Harvey Norman giving better deals on cash vs interest free) but the way afterpay has been integrated, O will find it unlikely prices for up and time soon for consumers. As long as their is advertisement value in afterpay, retailers willll wear it imp

  • Dsquall on 25/08/2020 - 17:53
    +5

    Afterpay is just another debt trap for people that can't afford their lifestyles (just like credit cards). At the very least, that's how they can be so profitable.

    If everyone paid of their debts in a timely fashion, both CC and afterpay would be out of business. We should all be grateful to these individuals otherwise we wouldn't have our 75-100k QFF points each year. When afterpay starts doing something similar, I'll start using afterpay.

    • gromit on 26/08/2020 - 10:00
      +2

      They are kinda doing something similar at the moment though not on the same scale, can earn up to 5000 points, you get 500 QFF on first purchase plus qantas points for the purchase plus you can then double dip by paying your afterpay with a QFF credit card. I literally pay with afterpay, then go into afterpay and immediately pay off the purchase with my credit card. an extra bit of hassle in the purchase but every bit saved/earned counts.

  • biltong2go on 25/08/2020 - 17:58
    +1

    It seems to be an 'old-school' perspective that you should never acquire any debt. That may have once held true, but over time, a "debt economy" becomes somewhat inevitable, and investors even count on consumer debt to keep their portfolios going; AfterPay is performing extremely well.
    In the USA, for many years, debt was incredibly common; starting with student loans, and then in fact, in order to build up a credit rating just to make certain purchases like vehicles. Gone are the days when debt was considered taboo; now it's more unusual for you to not have any debt.

    • terlalu on 25/08/2020 - 18:00
      +2

      your measure of wealth isn't how much $$$ you have saved, but how much people are willing to lend you…

    • gromit on 26/08/2020 - 10:13

      you are mixing up 'old-school' perspective. It wasn't that you should not acquire debt, it is that you should not acquire bad debt. bad debt is where you are paying for day to day living or luxuries on credit where it comes at a considerable additional cost (high interest). Good debt is fine, debt that is short term with no cost or debt that is earning you more than the cost of the debt. a Student Loan would be a good debt, a loan for a holiday would be a bad debt.

  • AddNinja on 25/08/2020 - 18:15

    How does Afterpay work as a merchant if the customer requests a refund?

  • Hansi on 25/08/2020 - 18:25
    +2

    I'm surprised no one has discussed how this could affect your credit rating yet.

    I don't work for banks or in the financial sector but I would assume that buy now pay later schemes would not work in your favour in regards to your credit rating or future loans. For me it indicates that you are not able to buy outright. If some in bulk it would look like you are taking out many small loans.

    If this is true than using Afterpay could really cost you despite being free for customers.

    • Carmen Sandiego on 23/09/2020 - 09:55

      I do work in financial sector and I have a credit card, ZipPay, and Afterpay.

      However, I also do yearly credit checks via Dunn and Bradstreet.

      I'll chime in once I can do the 2020/21 credit check :) But, I know banks looks at large credit debts unfavourably when it comes time for a mortgage.

  • AussieDeals on 25/08/2020 - 19:05
    +3

    I'm pretty sure you can set each of the 4 payments to be paid automatically from a credit card (VISA/Mastercard only).

    So I guess it can be pretty similar to using your card with a slight benefit in that some of the 4 Afterpay payments might spill over to the next billing cycle on your credit card. This will allow you to pay back those portions even later while you keep the cash in savings (but this is really starting to get into to extreme penny pinching calculations).

    Afterpay leads to the retailer getting charged way more than just using a card directly. However, it's designed to change shopper behaviour by getting people to buy more than they usually would. This is because many (but obviously not all) people using the service will pay less attention to the total purchase price and instead just focus on the amount shown as the first repayment.

    They're also probably popular with many people who don't have credit cards as its way easier to signup to these services than getting a credit card (in terms of both the application and the requirements to get approved).

    Strangely some online retailers, like Shopping Express, charge a surcharge for using your credit card/PayPal but none for Zip or Afterpay, which is the only occasion when I've used these services.

    • lethalmoney on 25/08/2020 - 22:52
      +2

      I use AP for exactly that reason
      I have it set to pay out via credit card. I have that credit card set to pay out statement balance (60 days interest free) .

      I shop within my budget. I use AP where I can to spread it over multiple billing cycles for credit card repayments. Any money not paying off the credit card, is money sitting in my offset account reducing my compounding interest on the mortgage.

      It's not just for people who can't afford to buy something, but it definitely needs to be managed properly.

      • greatlamp on 29/08/2020 - 09:31

        It's a good strategy, but I don't believe afterpay will help if you ever need to do a chargeback.

        • lethalmoney on 29/08/2020 - 16:44

          Thankfully I haven't ran into any issues, yet.

    • JuryWheel on 27/08/2020 - 13:00

      So weird re shopping express. I wonder how many other retailers charge a fee for credit card payment, but nothing for afterpay/zippay

  • vita on 25/08/2020 - 19:17

    I'm more interested in how do BNPL providers like afterpay make money for themselves? As its share price went up from $10 to $90 in 5 months, those investors must believe in something…

    • stayhome on 25/08/2020 - 20:13

      Take around 5-6% commission from the total sale price. Plus late payment fees

    • swimmingtoad on 25/08/2020 - 21:57
      +4

      They actually don't make money yet.
      Afterpay is worth about $26billion and is expected to turn about $30m profit in 2023.
      Don't forget they are also borrowing the money they lend out so they must pay interest on top of their operational/marketing costs.
      The model only works in a low interest environment. They aim for revenue (not profit) margin of 2%. If rates rise in the longer term they lose over 10% of their margin each increase.

  • monty168 on 25/08/2020 - 19:26

    Having used both Credit Card and AfterPay, my preference is AfterPay.
    They had me at the simple application process….

    • digitalbargain on 25/08/2020 - 19:35
      +4

      I guess that's the difference with a genuine regulated credit product which may assess income etc

  • OzzyOzbourne on 25/08/2020 - 20:06

    You can pay after

  • darkmoss on 25/08/2020 - 21:26

    The biggest advantage is having invested early on $ cha-ching cha-ching $$$

    • OzzyOzbourne on 25/08/2020 - 23:25
      +1

      Missed that, but got sezzle at its lowest

  • WhoGiveAShxt on 25/08/2020 - 21:50

    Putting more possible debts in your personal balance sheet and make your future self more miserable

    • greatlamp on 29/08/2020 - 09:33

      What has that future self guy ever done for you?

  • Donaldhump on 25/08/2020 - 22:00
    +1

    Advantage is my holdings keep going up

  • Diji on 25/08/2020 - 22:16

    I think most would use it the same way they would use a credit card - to buy things they can't really afford.

    Personally I use it occasionally for large purchases or when there are promos for using it, since I haven't found a credit card which would benefit me given the annual fees (and fee-free cards don't give me anything my debit card doesn't already).

  • Neoika on 25/08/2020 - 22:20
    +1

    AP merchants are limited and most of them sell discounted(5%+) giftcards in other channels. Paying 100% directly is wasteful, regardless of how late, how many instalments.

  • Flowerbomb on 25/08/2020 - 22:30
    +1

    Afterpay afterpay, why didn't i buy you on asx when you were at your lowest? /cries

  • kaleidoscope on 25/08/2020 - 22:41
    +3

    Here is a tip. Log into your creditsavvy account and compare your score against your suburb / age etc… You’d be surprised how bad the average is…

  • sparkles on 26/08/2020 - 08:17
    +2

    Throwing out a new idea as to the benefit of AfterPay. I use it to buy non-essential items, those more self-indulgent purchases. For example, at present I'm paying off an Apple HomePod. BUT I only allow myself ONE AfterPay purchase at a time. If you are disciplined to that ONE ONLY principle it actually thwarts excess spending and spaces out those naughty purchases. I've run up credit card debt in the past and got into the minimum payment trap, and I am not returning to that. AfterPay helps me avoid that.

    • brendanm on 26/08/2020 - 17:09
      +1

      Helps you avoid it by buying things you don't need that you seemingly can't afford? Do you actually need an apple homepod?

      • sparkles on 27/08/2020 - 14:16
        +2

        Haha, I can afford it. I could simply pay cash. However, for me it actually assists in spacing out those types of purchases. Everyone operates differently and this works for me.

        Plus, as an AfterPay shareholder it also works in my favour LOL.

    • cloudy on 26/08/2020 - 23:06

      AfterPay helps me avoid that.

      AP it would seem is feeding your temptation.

      It's proably best if you just stick with cash, if you can't control yourself to pay off the full amount before fees/interest, how can you say, "BUT I only allow myself ONE AfterPay purchase at a time"??

      It also relies on your self control.

  • ruddiger7 on 26/08/2020 - 08:43

    I buy expensive shit and dont need the wife knowing exactly how much it all is. (yes i can afford it)

    • cloudy on 26/08/2020 - 23:07

      dont need the wife knowing exactly how much it all is?

      is that coz your wife can't x4?

      • ruddiger7 on 27/08/2020 - 08:21
        +1

        I'm more a zippay person. I can choose how much goes out and when so i can mix it up.

  • Vote for Pedro on 26/08/2020 - 09:41
    +5

    I love how everyone is slagging millennials about debt without recognising our whole economy is built on debt.

    Perhaps thats a generational change that needs to start from the top.

  • Jackkkkkk on 26/08/2020 - 09:56
    -1

    does AP show in your credit history?

  • Chandler on 26/08/2020 - 09:58

    As per most of the other comments, I feel it's there for fiscally irresponsible people to spend what they don't have.

    I can see the potential benefit in spreading the cost, but that benefit combined with the additional work involved (and consequences for not following through), I don't see the point. Not for the sorts of purchases the service is aimed at.

    • dmbminaret on 26/08/2020 - 20:32

      As per many of the other comments in response to the comments you're referring to, a lot of individuals are not spending what they don't have, but rather just spreading the payments over 4 installments instead of one. I can afford to buy that $200 item but I choose to pay $50 now then $50 three more times.

      It is fiscally sound to me.

      • Chandler on 27/08/2020 - 09:55

        "most" was probably exaggerating.

        And yes, you are an example of the second half of my comment.

  • alisso on 26/08/2020 - 10:23
    +1

    I don't remember ever being specifically taught about credit cards, but I was raised with the vague impression that of COURSE you paid your whole balance off each month, why would you not? Which has probably saved me a lot of money and problems, but did leave me with some extra stress when there were times when circumstances meant I could only pay most of the balance instead of all. I use my credit card to make purchases, because it's convenient, and because it means my pay can sit in a high-interest savings account for longer before I have to transfer it out. And I only have no-annual-fee credit cards because pfft, they already get paid by the merchants, why should they get paid twice?

    What I've realised in recent years is just how many people use credit cards to get things they absolutely don't have the money for, and then just pay the monthly minimum for years. They end up spending a fortune, but it feels like they're "only" paying a little bit a month. Which isn't a bad strategy when you're talking about unexpected car repairs, but is not an ideal way to approach luxuries.

    Afterpay is, among other things, a way for people like that, who have already maxed out their cards, to access more credit/be taken advantage of.

    It's also a optional alternative to lay-by, because you don't have to wait to get your items, but you do have the risk of extra charges if you can't make payments, rather than just having to wait longer.

    I've used it and similar systems for mid-sized purchases that were important or time-sensitive, just because it was handy to spread the payments over a few months (a lot of them are fortnightly, so your $100 item would be split into $50 on each month's credit card bill). But most of the time, it's not very useful for me.

  • Gary Gary Gary on 26/08/2020 - 10:27

    Big advantage for me is that it acts like paypal, and on some websites it makes checkout easier. Afterpay is also linked to my houses offset savings account, so although miniscule, there is an advantage to having the cash in that account for longer.

    • digitalbargain on 26/08/2020 - 12:45
      +1

      The big disadvantage is the 6 percent fee the business pays that will eventually get passed on to you as a consumer..

    • jetabe on 26/08/2020 - 20:34
      +1

      No way is it like paypal it's got no dispute resolution and worst customer service

      • capslock janitor on 25/07/2023 - 18:06

        whabbout Zip Pay transaction disputes/resolution?

  • Jabba the Hutt on 26/08/2020 - 10:35

    Haven't used it, but am I correct in understanding it turns what would be one transaction at a single point in time into four transactions spaced over eight weeks? I'd find that annoying from a personal finance management perspective.

  • Jaysful on 26/08/2020 - 11:17
    +3

    Afterpay = dope ONLY if you know how to manage money.

    I like to not have all my cash leave my account at once for big purchases, especially when it's multiple birthday/wedding/festivities happening. I like to keep enough spare in case of an emergency like dental, car, house fixings etc.

    If I had the option of paying $3 a day to own my car for 3 years (without interest which is what Afterpay is), hell yes I would take it. This means I can own a car that I need for work and errands whilst having virtually no impact on my day-to-day spending.

    But be careful with buy now pay later because competitors like ZIP, Hummm, Splitit, Lattitude Pay etc. they have various fees and charges for larger spends. It then then becomes closer to personal loans.

    Afterpay is great way to reduce your financial risk and I frigging love that. There are people struggling out there - like students, trying to pay for textbooks but also needs personal purchases like make-up/clothes. I don't agree with the mentality of 'don't buy what you can't afford' because it's something more complicated than that depending on your life style and social expectations. I if they can manage money well, services like Afterpay will allow them the freedom to enjoy more things without braking bank, and it doesn't cost them anything extra as it comes out of the merchants who's paying to get access to broader audience. Consumers are winners here when it comes to buy now pay later, only if they can manage

    I can't believe businesses are complaining about Afterpay. It reminds me of EFTPOS, merchants wants access to more customers who's using cards but doesn't want to pay for the access to these customers so they start jacking up surcharge until it got standardised. I still don't get cafes and restaurants that open on public holiday with a giant sign of extra charge because staff cost more, why don't they just shut?

    • cloudy on 26/08/2020 - 23:11
      +1

      Consumers are winners here when it comes to buy now pay later.

      No, in the end, if we all use AP, and have all businesses take a 5% haircut on profits, we will all have to pay more for our produts.

      At the moment, with AP being a fringe product, most retailers can adsorb the cost. but imagine a world, where all transactions cost 6 or 7% to process (instead of 1-2% with credit cards). You know retailers can't take the hit when their profit margins on average is 5-10%.

      put simply, you can't have ever more multi billion dollar companies sprout up without them making money, and if they are making money, it's gotta come somewhere, AP sits between you and the retailer.

      • Jaysful on 28/08/2020 - 10:36
        +1

        Well I guess that's why I'm so happy with Afterpay right now. It's sitting in a sweet spot where Merchants are benefiting from a boost of sales whilst it's not such a staple payment gateway that they need to add the cost onto the consumers.

        What merchants eventually decide to do is up to them, and regulations should be in place (esp in Australia which I think have a pretty ok track record) to protect consumers.But I totally get where you're coming from because the whole food delivery thing grinds my gears: 20-30% pricier than in-store menu, smaller portion, etc. when you order for delivery. But that comes back to the delivery companies' 35% commission AND on top of that a delivery fee to the consumers, it's ridiculous.

        If you look into the recent enquiry into Afterpay and Zip or even the most recent financial results, their fees and income makes up a extremely small portion of their revenue and they negotiate between 1 to 6% transaction commission with merchants.In it's current form, it's definitely benefiting consumers.

  • chasingstoke on 26/08/2020 - 11:47
    +1

    I love using Afterpay in conjunction with with my interest free credit card for maximising my cashflow and leaving money in my mortgage for longer.

    It also makes paying for things on ebay really easy. Much cleaner/simpler user interface than paypal.

  • PurchaseAnxiety on 26/08/2020 - 12:11

    In theory, if you're on a tight budget, breaking payments into smaller increments can help not go over you're budget. In comaparison to credit cards, I actually think Afterpays penalties are way more reasonable compared the insane interest rates on most credit cards. Afterpay is also more convenient, because as long as you have money in your account, it's set and forget, so need to worry about forgetting about the CC bill.

    From the few times I've used Afterpay, I can say one con about it is impulse buying something you later regret. Then you get that fortnightly reminder of "hey, remember that dumb decision you made a while back? Yep, you're still paying for it".

  • digitalbargain on 26/08/2020 - 12:49
    +1

    Afterpay, like uber etc, is a great product. It's also a huge revenue generating product. But, there is no free lunch here, and reading through this post some really understand this, others don't, and some understand but continue to use the product for their own personal 'benefit' (I'm not sure in the long run there is a benefit, but harder to trace the cost passed on to consumers)

  • HeyHeyHeyIsItADeal on 26/08/2020 - 13:28
    -4

    Credit card has interest. Doesnt matter if you're late or not the money aint yours stupid. You spend it but you have to pay it back…

    Afterpay, The money is yours. You're just paying later in 4 installments with no interest unless you're late.

    If you know how to manage your money then it's better to use Afterpay. This item is on sale. It starts on the 1st and ends on the 4th afterwards its double the price. You dont get paid til the 5th. You only have 50% of the price of the item in your bank account. It's something you need/want. So you use Afterpay to only pay for 25% of the item and get paid on the 5th and then pay it all off.

    OR

    use a credit card and then get smacked by interest or take a payday loan and you're still screwed.

    • Ughhh on 26/08/2020 - 13:45
      +5

      use a credit card and then get smacked by interest or take a payday loan and you're still screwed.

      Is that the only scenario for credit card users?

      • HeyHeyHeyIsItADeal on 26/08/2020 - 13:57
        -4

        credit card has interest when afterpay doesnt. Im not going to list every scenario.

        • dbui8743 on 27/08/2020 - 14:06
          +1

          so what happens if you dont pay back the money to afterpay?

          The money is yours and it is still in your account, it hasnt left to afterpay, hence, it is credit from afterpay to you. If there is no interest, there gotta be another catch.

    • Tarnos on 26/08/2020 - 16:29
      +7

      Hmmm if I pay back my credit card before the due date (typically 28 to 55 days), I don't get charged interest. I am not sure what you are saying here.

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