Change is inevitable, and is more often than not associated with progress. However, this is not to say change, especially regarding technological advancements, is always beneficial to our professional and personal lives.
This is something we briefly discussed in our article, ‘Consumer payments behaviour: How do you compare?’. Namely, technological advancements, and the potential for them to influence consumers; for better or worse.
‘Buy now, receive now, pay later’ services
As we edge closer to the festive season, there is something of note; the rise in the uptake by consumers of ‘buy now, receive now, pay later’ services offered by providers (e.g. Afterpay, Zip and Humm).
These services allow consumers to buy and receive goods or services immediately, but pay for the purchase over time. Below is brief and general outline of how these services work when they are made available as a payment method by a merchant, and taken up by a consumer when buying goods or services:
As you can see, these services are different to other payment methods (e.g. cash, debit cards, and credit cards) that consumers may have available to them when buying goods and services.
The Australian Securities and Investment Commission (ASIC) recently published their review* of these services. Below is a selection of several of their findings, especially as they relate to consumers.
Number of consumers
The estimated number of active consumers (i.e. consumers that have used these services) rose from 400,000 (2015-16) to 2 million (2017-18).
Transaction volume and value
Revenue and missed payment fees
Consumer demographics and spending behaviour
Consumer repayment methods and negative financial impacts
When it comes to your personal finances, and making informed financial decisions, it’s important to keep true to your personal circumstances – your financial situation, goals and objectives.
In terms of your ongoing money management and the spending of money on goods and services, this applies to not only one-off high-value purchases, but also everyday low-value purchases – not only in isolation, but also in combination with each other.
As you have seen, technological advancements in consumer payment methods can sometimes be unhelpful in this regard. In a nutshell, without proper caution and awareness, they have the potential to negatively influence our spending behaviour, which for some may lead to a further exacerbation of an already underlying problem.
With the festive season just around the corner, it may be worthwhile to keep in mind the following with regards to consumers that use a ‘buy now, receive now, pay later’ service:
And, despite the two points above: 86% of consumers plan on doing it all over again at some point in the future.
If you have any questions regarding this article, please do not hesitate to contact us.
*ASIC. (2018). Report 600: Review of buy now pay later arrangements.