Buy now, pay later is on the rise in Australia, with more and more consumers and retailers opting to make the most of delayed payments.
Services accounted for less than half of 1 percent of transactions, but contributed a staggering $14.3 billion to Australian GDP in the past fiscal year.
About half of the 2,700 consumers surveyed said they had control over their spending by using the services.
“The research shows that consumers are choosing to buy now, pay later to help them budget and manage their money the way they want,” said Diane Tate, CEO of the Australian Finance Industry Association (AFIA).
There are nearly six million accounts on various platforms and users made an average of 16.6 trades last year with an average value of $151.
Buy now, pay later services have also resulted in the creation or retention of over 99,000 full-time jobs in the Australian economy.
Good news: Less than 1 percent of active accounts were subject to financial hardship, but the survey found that more than 7 percent of people cut back on essentials to make repayments.
Eighteen percent of users who buy now, pay later missed a refund, compared to 17 percent of credit card holders.
Reserve Bank data for the period March 2021 to March 2022 showed a 2 percent decrease in the number of personal credit card accounts.
However, credit cards still account for about 19 percent of transactions, totaling about $315 billion, while debit cards account for more than half of transactions and a total of $428 billion.
Buy now, pay later accounts for less than half a percent of all transactions.
Retailers who accepted BNPL payments increased their sales by an average of $25,880, while small businesses earned an additional $18,576 on average.
“Retailers are using (it) to help them grow their business and participate in the digital economy,” said Ms Tate.
Nearly a quarter of retailers increased their prices as a result of accepting BNPL services, although the majority have not changed their prices.
AFIA’s buy now, pay later code of conduct requires signatories to conduct proportionate affordability checks, limit late fees and support their customers who may be experiencing financial difficulties.