Buy now pay later services
What you need to know about buy now pay
Buy now pay later payment services allow you to delay payment or
pay by instalments (often fortnightly) over a period of time. Here
we explain how these payment services work, what fees you'll pay
and how to avoid getting into financial trouble if you're using
What is buy now pay later?
Buy now pay later services are offered by providers such as:
- Certegy Ezi-Pay
Buy now pay later services are offered by retailers and
service providers so you can buy a product immediately
and delay payment. You then pay off the product in instalments over
several weeks or, with some high-value purchases, over a longer
period of time.
Buy now pay later isn't only offered for
low-value purchases, like clothes and beauty products. Solar panels
and health services can also be bought using buy
now pay later.
How do these payment services
Buy now pay later services are offered when you shop online or
in-store as another payment option at the time of checkout.
You can apply for and set up a purchase plan through the
provider's app or website when shopping online.
If you're shopping in-store, a shop assistant will set
up the buy now pay later application on your behalf. The buy
now pay later provider will contact you when your application is
approved. This is usually a quick process.
You will need to provide your bank or credit card details the
first time you use these services so your payments can be deducted.
You may also be required to pay either a deposit or the first
Refunds and returns
If you have a problem with the product or service you've bought,
the shop or service provider's returns policy will apply, so
contact them first.
Are buy now pay later services worth
Buy now pay later services are often advertised as
'interest-free' or '0% interest', but the cost will add up if you
can't make the repayments on time.
Always check the terms and conditions before you sign up, as
they can be different for each buy now pay later service.
Here are some things to look out for before using these
- Late fees - There's usually a late fee every
time you miss a payment or pay late. These fees can add up over
- Monthly account-keeping fees - Some of these
services charge you a fixed amount for every month you continue to
use their service.
- Payment processing fees - You may be required
to pay a fee for each payment, on top of your set repayment.
Case study: Mai struggles to make ends meet after using buy now
pay later services
In the lead-up to Christmas, Mai decided to take advantage
of some markdowns by buying a couple of items online.
She found a new pair of designer sneakers worth $150. As Mai was
a bit tight on money, she signed up to a buy now pay later service
to split her repayments. She then found a hair straightener at a
reduced price of $300 at another online store. Mai used a different
buy now pay later service to buy the hair straightener and stretch
out her repayments.
A fortnight later, Mai discovered that her bank account was
overdrawn. She then realised she had not checked before buying the
items if she would have enough money in her account to make both
Mai was not only charged default fees by both buy now pay later
providers, but her bank also charged her an overdrawn fee.
Is your credit history or ability to repay checked?
Most buy now pay later providers do not check your ability to
make repayments or your credit history. This means you could end up
taking on more credit than you can afford and could have trouble
making your repayments.
This can affect your credit score as some providers report
late payments to credit
Managing your buy now pay
Stay in control when you use a buy now pay later service by
following these tips:
- Plan ahead: Make sure you can afford the full
price and that the repayments fit into your budget. Consider
any other bills or financial commitments due at the same time as
your buy now pay later payments.
- Don't get into debt: Consider linking your buy
now pay later account to your debit card instead of your credit
card. That way you're using your own money and avoid credit card
- Don't overcommit: Stick to a limit and aim to
have only one buy now pay later at a time.
- Ask for help: If you're having trouble making
repayments, contact your provider straight away.
Taking on too much debt?
An ASIC review of the buy now
pay later industry found that 1 in 6 users had become overdrawn,
delayed other bill payments or borrowed money so they could make
their buy now pay later payments.
Making a complaint about
buy now pay later services
Most buy now pay later providers have dedicated complaints and
hardship services. Contact your provider to discuss your complaint,
or if you are having difficulty making repayments.
A free financial
counsellor can also help if you're struggling
Using buy now pay later when you shop can be a
convenient way to pay for things, but you need to be careful not to
overcommit financially or buy more expensive items than you usually
Last updated: 13 Dec 2018