- 30 per cent of Australians now have a Buy Now Pay Later account, equating to 5.8 million users
- Nearly 50 per cent of Buy Now Pay Later users have either cancelled or stopped using their credit card
- 84 per cent of Buy Now Pay Later Users have an Afterpay account
Australians are cancelling their credit cars in favour of Buy Now Pay Later payment options according to research by comparison site mozo.com.au
Mozo’s researchers found close to half of all Buy Now Pay Later users have now ditched or cancelled their credit cards in favour of the new payment service.
“Buy Now Pay Later has changed the face of the way we pay for goods with more than 25 per cent of users cancelling their credit card and a further 23 per cent saying they no longer use it. The ease and convenience of opting for bite-size scheduled payments has certainly taken Australia by storm, but the pitfall is that it’s incredibly easy to bite off more than you can chew, and miss a payment,” says Kirsty Lamont, Mozo Director.
Lamont said while Buy Now Pay Later users understood missing a payment could affect their credit scores there seemed to be a disconnect between understanding and behaviour.
“Our research found that while three out of four users understood that missing a payment could affect their credit rating, one in three users had missed one or more payments, putting them at risk of damaging their credit score.”
Mozo’s research found young men aged between were the worst offenders with close to half admitting to missing one or more payments, while 40 per cent of females aged 25-34 had missed one or more payments. Awareness about credit ratings was up 10 per cent from the previous year, however, those who had maintained a perfect payment record had actually decreased by three per cent.
In fact, six in ten respondents said the ability to make smaller payments were often influencing them to make purchases they wouldn’t normally make, highlighting that Buy Now Pay Later options can make it very enticing to spend.
With 30 per cent of Australian adults now having one or more Buy Now Pay Later accounts, there are approximately 5.8 million users across the country. Afterpay dominates the market share, with 84 per cent of users holding an Afterpay account. Since arriving in Australia in 2015, Buy Now Pay Later has soared in popularity. Afterpay alone is now available at approximately 13,000 retailers across the country.
“Our research found that one in four users are hiding their Buy Now Pay Later purchases from loved ones, indicating that a number of users aren’t proud of their spending habits. Males aged 25-34 were most likely to conceal their purchases with nearly 35 per cent admitting they did so,” Lamont said.
“Buy Now Pay Later users to appear to be making a high number of purchases through the payment platform, rather than making the odd purchase here or there. 25 per cent of users have 3-5 payments on the go at any time, which can be a lot to keep track of. To stay on top of payments it’s important you have a solid idea of your incomings and outgoing in your account and understand when your scheduled payments are. You will be paying for an item months after you’ve walked out of the store or click ‘buy now’, so it’s crucial to consider the possibility of poor credit ratings and additional costs through late payment fees if you don’t think you can meet your payments on time,” Lamont concluded.