Buy Now Pay Later (BNPL) is a lucrative interest-free service that allows shoppers to receive an item immediately and pay for it in instalments. Popular service providers in New Zealand include humm (formerly Oxipay), Afterpay, Laybuy, and Zip Pay. Most schemes allow users to make payments in weekly or fortnightly instalments over several weeks.
Most New Zealand Buy Now Pay Later services offer between four and eight equally-spaced instalments, although provider policies will vary. Provided that users pay on time, there are often no extra fees or charges involved. But late payment incurs sizeable late payment fees, of between $6 and $10 each time. Service providers' earnings are mostly based on the fee they charge to retailers, a small percentage of the value of each BNPL purchase made by customers.
Applying for a BNPL account
There are lots of platforms New Zealand shoppers can sign up for, the most popular being Afterpay. Applicants don't need to pass a formal credit check, nor do they need to undergo an intensive application process. Provide your ID and contact information, link a valid credit card or debit card, get your personal barcode, and pay using BNPL at the checkout.
Online and in-store shopping
Shoppers can use Buy Now Pay Later as a checkout option when making a purchase online or in-store. You can purchase almost anything, including clothing, beauty products, homeware, electronic devices, automotive parts and novelty items.
Some BNPL services allow you to purchase e-gift cards for friends and family members to use at over 60 retailers. Exchange these gift cards via email or smartphone, or print out a copy when shopping in-store.
Once you have opened your BNPL account, your app dashboard should show how much you can borrow. At this point, your account may undergo a soft credit check before you can confirm your purchase. Once approved, you may be able choose between several payment plans, including the interest-free weekly or fortnightly instalments, or, for larger purchases, a finance option involving monthly payments and interest charges.
Fees and interest
Monthly or weekly payments don’t accrue interest. The only fees that normally apply to your purchase will be late payment fees of between $6 to $10 per missed payment. But some providers may charge payment processing fees or monthly account-keeping fees if you have an unpaid balance at the end of the month following the month in which you made the purchase. Read each provider's schedule of fees and charges before choosing one that's right for you.
Note that it's also possible to incur interest on a purchase if shopping with a credit card instead of a debit card, if you don't pay off your credit card balance in full on the payment due date.
Should you be dissatisfied with your purchase or receive it in a damaged condition, you must request a refund directly from the retailer. Whether you get a refund in full or in part will depend on the retailer's returns policy. Once approved, you will either:
- Receive the full refund amount in your account
- See the remaining monthly or weekly payments cancelled
Alternatives to BNPL
If you'd rather not pay using BNPL you have other options, including:
- Store finance. You can pay off a large purchase in equal instalments and no interest within a store’s special-finance period. Note that you will receive an interest bill if you fail to pay off your full balance by the end of the period.
- 0% interest credit card. Some credit cards offer an introductory 0% APR on purchases, usually for a period of 3-6 months, occasionally longer. During that time you need only make the minimum monthly repayments if you wish, but you can choose to pay off more to avoid accruing a large balance, plus interest if you fail to pay off your purchases by the end of the introductory period.
- Store cards. Like a credit card, you can use a store card with a specific retailer, purchasing items on credit and paying them off at the end of the month.
- Traditional credit card. Like BNPL, pay no interest if you clear your balance on or before the payment due date each month. However, unlike BNPL, most cards have an annual fee, but they may come with cashback, rewards points, or Airpoints, or complimentary benefits (like travel insurance or airport lounge access) to make the fee worthwhile.
- Debit card. Using a debit card to pay directly (rather than linking it to a BNPL service) means that you are using your own money upfront. You won't risk late fees or interest charges, or run up a debt you can't afford.