Australia's online spending habits revealed
Has Australia adopted a buy now, pay later mindset?
Power Retail has released its second Australian report on Buy Now, Pay Later (BNPL) services, such as Afterpay and Zip Pay, and it shows Australians have adopted the popular payment method.
The report, which gathered insights from more than 9500 online shoppers and Australian retailers, revealed 98% of shoppers were aware of BNPL as an option, 10% of shoppers used it for every purchase and 41% of retailers currently worked with multiple BNPL providers.
Managing Director of Power Retail Grant Arnott said BNPL schemes were no longer considered a fad, but a legitimate payment method.
“It’s certainly made its way from an explosive disruptor into the norm,” Mr Arnott said.
“In 2018, only 32% of Australian retailers offered BNPL, now 41% of retailers are involved and have contracts with up to three different providers.”
Mr Arnott said BNPL has proved popular with consumers, particularly those who brought fashion items which were responsible for 52% of BNPL purchases.
“The actual usage of BNPL has risen between our reports, from 27% to 39%,” Mr Arnott said.
“We’ve also noted a dramatic reduction in the size of transactions with an average spend of $1098 in April 2016 to a median of $155 in September 2019.”
The increased usage has also led to a rise in missed payments, with 19% of online shoppers found to have missed at least one payment in the last 12 months.
RACQ Financial Advocacy Analyst Nathanael Watts said consumers needed to keep their wits about them when using BNPL services.
“The thing to remember with these services is the extended time it takes to complete a purchase,” Mr Watts said.
“For example, purchasing a $100 outfit for the weekend using a BNPL service may seem simple and not cost you anything extra, but you may be repaying the amount over the next eight weeks.
“During that time, you may be tempted to spend more money because your next instalment isn’t due for a while.”
Mr Watts said consumers also needed to consider how they would make the required repayments.
“If you make your repayments using a credit card, then interest may begin to accumulate,” Mr Watts said.
“You may even end up paying off an item many months or even years after you bought it and pay much more in interest.
“It’s important to meet your repayment obligations as fees or penalties may accrue if you miss a repayment or extend your repayment period.”
BNPL Fast Facts:
- 10% of shoppers use BNPL whenever they can.
- 98% of all shoppers are aware of BNPL services.
- 52% of all online purchases involved BNPL were for fashion items.
- 19% of online shoppers have missed a BNPL repayment in the last 12 months.
- Females (42%) are more likely to use BNPL than males (30%).
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.