"Buy-now, pay-later" schemes

Isn’t that the same mob that supposedly kept the banks honest, so that is a Very Reassuring statement. :roll_eyes:

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This is probably the most concerning case of these services I’ve seen. Anyone who needs a loan to afford food definitely should not be given one https://youfoodz.com/pages/zippay

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Thanks for highlighting this, I’ll be sure to pass it on to our finance writers.

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Interesting article from my Super provider on why Afterpay does not comply with their ethical charter.
https://www.australianethical.com.au/news/dont-invest-afterpay/

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Wow, very interesting. Thanks for sharing @Peterchu :+1:

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Hi Community members. CHOICE is on the lookout for anyone who’s incurred a late payment fee with a buy now/pay later service. Any posts along those lines are most welcome.

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Check out @AndyKollmorgen’s latest investigative piece into buy now, pay later services. :money_with_wings:

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I see that there is a new (didn’t know of it until today) kid on the block…

https://deferit.com.au/

It is a bill payment system which allows account users to make smaller payments after the bill due date. It appears to finance itself by changing a $5 per $500 account limit amount (e.g.limit of $500 in bills is $5 per month when an active bill exists and $15 per month for a $1500 bill limit with active bills)

Looking at the website, they don’t seem to take any responsibility for anything and also won’t make a bill payment if the monthly fee is not paid. I suspect that those who are suffering financial stress and have limited ability to make bill payments on time might find this attractive, but it could also encourage overspending (individuals spending money otherwise set aside for bills) and also further problems if the monthly account fee is not paid (then they would be no better off as they would be overdue with any active bill).

I think a better solution would be for a person under financial stress to contact the bill issuer and arrange special payment conditions to allow a bill to be paid (such as having monthly deductions rather than a quarterly paid bill).

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Arghhh buy now pay later are just traps for the unwary. If you cant afford to buy it, you cant afford to have it. thats how to avoid financial stress. But, seems we all must have right this minute. Saving for something, waiting a couple of months or years, seems to be so passe.

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I use Layby & Afterpay Zippay all of which are obviously pay over time. As you are probably well aware if you use Afterpay you have to pay 25% up-front & then pay off the remainder over scheduled payments. Not really any different to layby in that regard. Zippay is a little different and perhaps a bit more dangerous as you don’t pay anything upfront and at the end of every calendar month you are charged $6 if you have anything outstanding, this no fee up front can really be the hidden danger as you could quickly out strip your ability to pay the total cost once you start the payments. We only ever use one or the other with only one active at anytime. Some stores we use now no longer provide layby but do offer Afterpay &/or Zip so we chose then to use that and pay it off (prefer layby first then to use Afterpay to avoid the monthly fees and it is a 4 payment scheme similar to a layby & then only use Zip as a final choice if the other 2 are not available). The problem arises if someone uses the Afterpay type payment system too many times and then decide they can’t pay the rest. With layby they can obviously just cancel the transaction and lose a bit of money for costs. Afterpay and others then leave them with either a bill they can’t or struggle to pay and penalties or trying to return the goods and still suffer a financial hit plus possible penalties.

I really don’t see a great issue if the services are used wisely, it is the financially unwary that is the concern.

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There are a few problems with that attitude:

  • These schemes are frequently moving into medical/vet bills, food and utility costs (see multiple examples above). ‘You can’t afford to have food if you can’t pay up front’ is easier to say for someone not in that situation
  • You’re presuming a level of financial literacy that isn’t taught in schools. People don’t understand that if something unexpected happens it’s not a matter of merely losing access to the service. You wind up harassed by debt collecters and with a black mark on your credit record. The lenders rely on ignorance of this to tempt people in

In these ways people aren’t simply ‘unwary’, they’re being taken for a ride our system shouldn’t allow

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I don’t think @SueW is in disagreement with your second point, and I think her unwary was more about those who don’t have a good level of financial understanding similar to what you point out. Your first point is sadly a reflection of very tight times for many and the impact that the lack of money places them in. I don’t think again that @SueW was pointing to food purchases but rather to the many things people want but don’t need these days eg the latest smartphone, the 60" QLED TV, the new fashion shoes or clothes.

These schemes make it easy to pick up and take home an expense that in the end the purchaser can’t meet, thus forcing them to then put food and other costs onto the same plans and slowly/quickly financially crippling them. I think we all agree that some stricter control needs to be in place, they even may be the new face of payday lending if they aren’t being used carefully. If they are used carefully and with the right legislation controlling the systems then they can have a place, I am just unsure how well they would survive in a more restrictive environment. If they folded it would not greatly concern me as I think that layby would again be more acceptable to many businesses that have removed that option with the growth of these payment schemes.

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Thanks @grahroll thats exactly it. People need to learn the difference between wants and needs, luxuries and necessities.

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Another Afterpay competitor is entering the market:

Some further commentary here:

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And now there is another one.

I guess that all the shorn sheep in the image will represent the new Aussie customers.

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I was excited for a second because I thought this was some sort of ‘laybuy’ platform. Alas it is merely another credit card masquerading as a free service

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I’ve previously raised concerns about pay later schemes moving into bills. This can pressure people into taking loans they can’t afford because they have no other way to pay a bill. Here’s the latest I’ve seen advertised:

I’ve also seen another sainy ‘Any Bpay Bill’ can be paid this way

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It is a societal issue bigger than just those who take advantage to get a dollar in their pockets, fairly or unfairly. It is well put by this meme that periodically resurfaces.

Substitute ‘peer pressure’ for ‘holiday’ and the ‘set’ is made.

image

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Another twist from the corporate world. Pay employees now, fund payroll later.

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