Buy now and pay later systems - I need help - Australia

4개월 전

There has been allot of new featured companies getting in the middle to try to encourage purchases, mainly directed at online business. BUY NOW PAY LATER - but which is the best?

Above image from giphy

Some seemed to be linked to VISA and Master card credit cards etc. In a practical sense you go to a website, pick your purchase and then hit the checkout button. Now instead of just getting VISA, MasterCard or Bitcoin, we have these other buy now, pay later options as well. What do all these options mean?   

For an old school pay with cash guy like me the whole thing is very confusing. The checkout payment options seem to give you a chance to pay in installments, while escaping the fees, yet still getting points, like frequent flyers. 

I’m so confused…. 

As they don’t seem to be charging fee’s I assume the poor old retailer is having to take a hit, else not sure how these companies are making their money?? I don’t own a credit card, never have. However it’s been suggested to me by many people that I am stupid and should be exchanging my 'shopping data' for frequent flyer points and other free thing such as travel. It seems everyone is doing it! Pushing aside the ‘give up my data’ question that none of these people seem to even consider asking , this post is to help me decide which is the best “buy now, pay later” option. From the top three I have come across. 

The Three companies that I am comparing (because I have come across them) are:  

Please understand this is not my financial advice or professional opinion or anything like this - I am confused and trying to research myself here. I am confirming I have no experience with this and just looking to get other people’s opinion that I have judged/weighed these groups up fairly.   

Afterpay 

Allows customers to receive the product right away and then make interest free repayments every fortnight over 4 equal instalments. To buy now pay later with Afterpay, you must have a MasterCard or Visa debit/credit card. However, Afterpay generates the majority of its revenue by charging fees to its Merchants/retailers. I believe Afterpay currently earns fees of around 3.7% on merchant sales. I suspect it also generates some selling your data. It charges a late fee - initial $10 late fee, and a further $7 if the payment remains unpaid 7 days after the due date. 

SUMMARY

  • Huge fee to the merchant – that sux
  • May give you points from your credit card schemes – seems good if they do 
  • May sell your data or have hand shake deals behind scene with banks – Err…not sure, guess if your chasing ‘points’ as cheap as possible you go who cares?
  • Appear to charge you late fee – I guess that sux, but don’t know, as never paid a late fee in my life as always paid with cash saved. 

My score: 2.5/4 

Zip Co 

Provides consumers with interest free loans of loans of up to $1,000. Zip advertises to its merchants that they ‘wear all the risk, both credit and fraud, so once the transaction is approved you’re guaranteed payment’. This fee is approximately 2-4% of the transaction value made through its platform. It seems to be more like a pre-approved loan they give you with no interest up to $1000. So it’s like they buy it for you. Not sure you get points from your credit card though, not seeing this anywhere? May pay a late fee of $5 when you've made no repayments for more than 21 days 

SUMMARY

  • Huge fee to the merchant – that sux
  • Appears no points on credit card – that sux
  • May sell your data – Err…not sure, guess that sux twice as bad if not getting any points.
  • Appear to charge you late fee 

My score: 2.5/4 

Splitit 

Allows customers to split their repayment into as many as 36 interest-free monthly payments. Customers must have an existing Visa or Mastercard. Splitit generates 100% of its revenue from fees charged to merchants based upon sales made via its Splitit Payment Platform. Unlike all of its competitors I can find, it does not charge its customers any late fees. To me this seems like the best out of all of them, as you get all your frequent flyer points, get your product straight away, pay no interest and don’t even get in trouble if you don’t pay on time – no fee’s at all. Spliit appears to earn fees of around 1.5% from the merchant. Which is much lower than any of the others supporting local Australian business, so I like this. It’s what lies under the surface here that concerns me. It seems the merchant holds the risk ultimately if the customer doesn’t pay. I’m not sure what this risk looks like? Unfortunately I can’t seem to find with an internet search. 

SUMMARY

  • Fee to the merchant – that sux, but it seems lowest and probably reasonable
  • Appears to give points on credit card – I guess that’s good.
  • May sell your data – Err…not sure, but they are have chance to do this by nature of being in the middle.
  • Don’t appear to charge late fee – this is good, but not sure how they chase you or does the merchant get stuck doing this or is it the bank. I don’t feel so bad if it’s the bank that chases them. It appears like they leave it up to the bank and possibly some risk back to the merchant?

My score: 2.8/4 

Has anyone had any experience with these companies? I assume they all profit by selling my consumer information which they now have by being in the middle of my purchases and taking a cut of the sale and charging the retailer. 

However if you had to pick one of these based on. 

a) Gives you the best deal in-terms of no interest, points on your card etc. 

b) Supports the ‘online shop’ the best. I like to support merchants, so anything that is a win/win or most balanced so all people win is what I like to support.  

If Crypto currency was not an option. Based on my ‘likes’ above and your personal experiences, which BUY NOW, PAY LATER option would be your main go to when purchasing online? Do you have a favourite and why?  


Above image from giphy

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My concern with these types of financial product is the ease of which they seem to be available to consumers and the way they seem to target the more vulnerable socioeconomic demographic.

Posted using Partiko Android

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Absolutely - - still, this post is about comparing to determine which is the least worse! haha.

Keen to hear from someone who has actually used to see how it went for them - know anyone who has used and which one do they use? :)

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I know of a few people that have used either Zip or After (I'd never even heard of the other option until this post), but nobody I'm close enough to that I would delve into the details of the process with them - sorry.

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Thanks anyways - yeah just keen to make sure I understand properly and not just jump to a conclusion because well..I'm not a fan of credit etc...

I don't know about that site but I can relate to some of the tings you say. I don't even have a smart phone and mainly use cash and hard currency. They hate it when they can't track someones habits, especially the banks!! Can't track my locations unless I'm at home. All this new technology that is supposed to "help us" making things easier, it's not for our benefit but yet there is a sucker born every minute and it always becomes a trend in society. Seems like people can't recognize what could be harmful to them in the long run. I know I'll eventually have to adapt but I will resist for as long as I can.

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Thanks for sharing.

...Yeah people look at me weird and sometimes even people behind the counter get a bit grouchy ( they have to touch money) now when I pay in cash, but its clean and done.

I'd washer they'll also make some money on those that miss payments, as there will be quite a few.

With regards credit cards, all the ones I've looked at which allow you to collect points (frequent flyers etc.) have a yearly fee attached to them. When I figured our how much I'd have to spend to make it worth while, it would cost me more to have it than the value I'd get in return.

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Thanks for the considered response - the more I read the more I'm leaning that Afterpay is a good thing allowing lay-buy, if responsibly used - but yeah I see the evil view side as well, if they are enabling people who can't afford to book too much up. Where Splitit you do need a credit card (As you said normally come with annual fee's etc -- unless you happen to have a way to make the bank wave them) then you can get all the normal points on your purchase, earn returns on your own money and just make your regular payments and set.

For me I doubt I will use anything listed here and just keep paying cash -- but there will be a day where cash will be no more, and I am compelled to think about this stuff; things like getting 'free flights on points for things I am buying anyways' is compelling to my life style, so I must try to understand these things and plan :)

Cheers

All such companies serve only one purpose. Continue to prop up the economy with unsustainable purchases and growth today, that can be paid for "tomorrow", instead of allowing everyone to realise that economic models should eventually find a point of equilibrium, and that it is okay for things to not grow.

If things aren't growing, they've reached their ideal size. If they continue to grow, upon the promises of have today, pay later - there's an analogy for that: cancer.

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True

...still there maybe small but legitimate cases where it might be useful if used wisely. Some of these come across like a lay-buy style thing.

Keen to see if anyone has actually used to give some insight.

I use Afterpay all the time. It means I can buy things I want and need and pay them off, rather than all at once. A lot easier on the wallet for me. I have zero issues with their business model, and they can have all the data they want. Data is currency and I'm fine with them knowing what I buy with them.

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Cool - thanks for sharing that. Just curious was my take on them correct? i.e. you still get spend points from your credit card company and the only fee is a late fee?

Also what do you think of one of the others, would you use them if offered the choice?

Cheers for your insight.

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I wouldn't know on the credit card thing, I don't have one. I just use it as a way to spread costs over time. Only fee for users is a late fee, which is capped. I don't use any others as they're not offered most places or have fees or check your credit rating, and mine is screwed.

Afterpay just gives me a way to ease cost burdens. I've bought new headphones, an electric skateboard, and even just socks and undies with it.

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Interesting, funny how so many people immediately think its a horror story. I suspect afterpay is good if you want just a few low costs things, can confidently pay, just need some time..Where something like Splitit, looks like it's aimed at larger price things like a lounge...So while you could call them evil, in fact its a bit like bidbots, its how you use them or look at it. The credit card company has already sat down with you with Splitit worked out how much you can afford to be loaned (set your limit) and Splitit is just giving you away to not only use that, but avoid the fee's and get bonus points.

Hey man, do think you could do me a huge favour and google them and based on your actual experience let me know if I'm right in thinking Splitit is actually as I think & would you use it?

Cheers

I live in the northern suburbs, luckily just outside some of the more poverty stricken areas. These suburbs all have a Cash Converters or some sort of money lending place, venues that sell alcohol reasonably close to each other, etc. and they all seem designed to keep someone stuck in a cycle of poverty.

I have a friend who works, but has a girlfriend who still has a welfare mindset (I understand it myself) and she does things like Afterpay and Rentorilla for her furniture, and electronic equipment. She gets the stuff she needs immediately and then pays them off over time. She pays more in interest, but it means that she eventually owns her stuff.

Then however, she will go and put more stuff on credit. It's a vicious cycle.

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This was my original account.

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No worries - cheers for response.

I guess what I was looking for with this post was to try and flip this a bit. Someone recently told me get a credit card, buy all your crap with it and before the interest falls due -- pay it off in full. Thus getting all the frequent flyer points = instant free flights etc and paying $0 extra for the item.

For someone like me, that means using the banks money to buy me something, meanwhile I earn interest on the money i would have spent and they give me free flights...it seems too good to be true - but apparently it works this way - you just have to get the bank to wave the annual credit card fee and the sign up fee and your gold - - which the banks have told me they will do.

So I'm scratching my chin, thinking how much further can I take this....thus exploring these things now.

Can you ask your friend how much more in interest she paid with Afterpay? because it seems there is no interest..or did I read it wrong? it's just a fee if you make a payment late.

Now to Splitit - on the surface I buy a sofa. Splitit loans me $1.5K and I gives me 2 years to pay it back. They check my credit limit on my card. They then use the banks money to secure the item (so my limit on the card goes down as if I have borrowed on the card) however I pay no interest what so ever - my monthly repayment just shows as a deposit and my credit limit goes up - the credit card doesn't see I have borrowed anything, but it recognises the purchase and gives my points - I get the points each time I make my regular lay buy like payment in...What is the catch???

I can't run out and buy more things if i borrow too much, as it's set to what ever the credit limit is on the card. I get to pay in installments and making interest keeping my own money with me and I get fly points...It just seems too good to be true for the consumer - as long as I don't buy things I wasn't going to with cash anyways - hope this makes more sense where my thinking is at :)

Cheers