Buy Now, Pay Later (BNPL) has become an increasingly popular retail payment option for shoppers of all ages. So, if you are looking for a way to get some new eyewear, you have the option of joining thousands of Australians that enjoy the option of BNPL.
There are various BNPL options online and in stores. By using one of the various payment platforms, you can take home your glasses immediately and repay the purchase amount in instalments over several weeks. Many payment platforms, accessible on iOS and Android, are available at over 20,000 bricks-and-mortar or online stores across Australia.
Below we explain how BNPL works and the different app options you can choose from. This guide is not designed to give you all the answers, but may help you gain a grasp of how it works and what fees may or may not apply.
How Does BNPL Work?
BNPL services offer an intermediary finance service between customers and retailers. Customers can link their credit or debit card to their BNPL account—which usually happens with immediate approval in-store or online. Some payment services will make a ‘soft’ credit enquiry before opening an account. This enquiry is usually a request for your credit history that may not affect your credit score. Once approved, payment instalments are automatically charged to your debit or credit card.
Does Buy Now Pay Later Charge Interest?
BNPL platforms don’t charge shoppers any interest, although they do impose a fee from retailers who offer it as a service. However, late fees do apply if you do not meet the payments as scheduled
Late fees apply on any missed instalments such as not enough credit left on a maxed-out credit card or if there are insufficient funds in your linked bank account.
If you’re using a credit card with a BNPL platform, you will be charged interest by your credit card provider if the full outstanding monthly balance is not received and processed by the credit card company on the due date. We recommend you confirm all credit card fees with your credit card issuer.
Other BNPL fees may apply, depending on which BNPL service you are using, such as:
- Early exit fee
- Monthly account-keeping fees
- Credit establishment fee
- Payment processing fees
Even though no interest is charged, it can be quite easy to accumulate a considerable amount of fees when using BNPL services.
Buy Now Pay Later Platform Options in Australia
The BNPL market is competitive and offers plenty of options. Each service provides their own payment and fee policies.
Before deciding which BNPL payment service to use, we recommend that you carefully check and compare the terms, conditions and fee schedule to decide which, if any, are appropriate for you.
When you choose Gratify at the checkout, online or in-store, you’ll only pay 25% today, and the balance over equal instalments. There’s no interest and no cost if you pay on time. Gratify is completely free to use provided you make your repayments on time. It’s ad free and your data is not sold to advertisers.
Zip Pay (Everton Park)
Zip Pay is another leader in the market with a large number of participating retailers. You will need to open an account with a minimum credit limit of $350 and maximum of $1,000. You have a choice of how to set up the repayment plans, which can be paid weekly, fortnightly or monthly.
You can have up to 60 days fee-free. In the month following your purchase a $6 charge applies should you have an outstanding balance on the first of every month. For payments 21 days past the due date a $5 late payment fee is levied. Minimum repayment is $40 monthly.