Aussies Turns to “Buy Now Pay Later” Set-ups and Drop Credit Cards

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Aussies Turns to Buy Now Pay Later Set ups and Drop Credit Cards

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SYDNEY, Australia – Opportunities for “Buy Now Pay Later” programs grow despite the Coronavirus pandemic. With this, most Aussies decline using a credit card. ASIC reviews the said trend, and this corporate regulator will have its findings by October.

The worldwide pandemic and the initial slump of the nation averted the growth of “buy now, pay later” programs in 29 years. However, watchdogs circle and customer promoters caution that the new lay-by program puts Aussies at the peril of getting more debts.

The model witnessed immense development despite the ongoing pandemic. It typically lets consumers settle their acquisitions in instalments. It will avoid charges once they solve it on time.

Klarna, Zip Co, and Afterpay’s programs, “Buy Now, Pay Later,” give services at department stores and significant retailers’ checkouts.

However, the concern is that they don’t control the industry, unlike other funding services.

The business watchdog is presently revisiting the segment, and the report will be ready in October to provide how these programs can protect customers.

ASIC, or the Australian Securities and Investments Commission, studies how other countries establish legal defences, like Sweden.

Zip and Afterpay have around 5.4 million clients in the country, despite having dissimilar corporate models.

Annabel Munro, a university student, and a retail worker is an Afterpay client. Her mother dejected her from applying for a credit card. This 21-year-old student utilizes the program to purchase her shoes and skincare online.

Munro admires the program’s convenience, and it works in her end. All she needs to do is to pay on time. However, she previously wasn’t able to settle her two purchases. These separate transactions had a $10-charge as late fees.

After a single miss, Afterpay put her account on pause so she can’t use it to spend further.

Munro explained why she wasn’t able to settle it, and it’s because she didn’t have work during the pandemic. She couldn’t use the money to pay for the expense because she’s holding on to it. Now that she’s able to work again, she’s ready to pay her transactions on time.

Despite the pandemic, investors didn’t stop putting their money on the “buy now pay later” segment, making it profitable.

Afterpay has about $20 billion of market capitalization, and it witnessed a price increase from $8.90 since March 23. The increase was during the beginning of the COVID-19 pandemic, which was about $75. Now, it’s exchanging about the $70-mark, and it’s in the top 20 stakes of ASX by value, where it joins BHP, Commonwealth Bank, and CSL.

The corporate model lets clients make instant transactions, and pay the cost on periodical repayments. The interest fee is free if they settle it on time.

Nicholas Molnar and Anthony Eisen run Afterpay. Now, it has about 10 million active clients internationally.

Afterpay attracted a lot of young professionals and millennials. There are 5.6 million customers in the United States or the US market, a million in the United Kingdom, and 3.3 million in Australia.

AS per Damian Kassagbi, they think there’s a significant generational change. He stated that HILDA data displays the decline of credit card uses.

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