Shoppers paying later with ‘no fee’
SOPHIE ELSWORTH HUNDREDS of thousands of shoppers are rushing to use a fee-free payment instalment plan for goods, particularly during the festive shopping season.
The online payments service Afterpay was rolled out in Australia 18 months ago with fewer than 10 retailers and a few thousand customers. It’s grown to have more than 1500 retailers offering the service which is now used by more than 250,000 consumers.
The company Afterpay Holdings listed on the ASX in May and co-founder Nick Molnar said the growth has been phenomenal.
It allows customers to walk away with goods without paying fees and pay for the items in four equal instalments.
“We have some of the best retailers in the country on board including Country Road, Mimco, Cue clothing, Toys “R” Us, Sheridan and the list goes on,’’ Mr Molnar said.
“We’ve grown really quickly and the main driver has been the customer-centric approach to the payment service, we are unashamedly in the customers’ favour.”
No fees or interest are charged to customers using the service and the payments are linked to a customer’s debit or credit card to make the four regular instalments.
So on a dress for $200 it is paid off over eight weeks with repayments of $50 made each fortnight.
Afterpay earns a commission from the retailer for each purchase using the service.
Shopper Millie Gilroy, 27, has used the Afterpay service to buy more expensive items including a $200 wallet and also used it to buy all her Christmas shopping.
“I wanted to buy something for myself that was a bit out of my reach so I bought a wallet and did not have to use my credit card to pay for it,’’ she said.
“I debited the amount of four payments which was easy, the payments were taken from my savings account and there was no interest charged.”
Consumer finance expert Heidi Armstrong said these types of services can be a good way to pay for items as long as repayments aren’t linked to a credit card.
“It works a lot like lay-by only it doesn’t cost anything extra (the store bears the cost) and you get the goods straight away,’’ she said.