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Back to News & ArticlesBuy Now, Pay Later 101
You've probably come across payment options such as AfterPay, Klarna and PayPal Pay in 4 when checking out online.
These are all Buy Now, Pay Later (BNPL) services, and they’re changing how we shop.
What is Buy Now, Pay Later?
BNPL is exactly what it sounds like – it’s a payment option that lets you buy something immediately and pay it off in instalments. For example, if you pay for something with Afterpay, your total cost will be divided into four instalments to be paid every two weeks.
Buy Now, Pay Later regulations
BNPL services are now regulated in Australia under responsible lending obligations, just like credit cards and personal loans. That means providers must assess your financial situation before approving you. If you already have a BNPL account, it’s considered a credit facility, and lenders may view it the same way they would a credit card when assessing applications.
Pros and cons
You may hear some people say to avoid BNPL services, while others swear by them. Here are some of the pros and cons.
Pros | Cons |
|---|---|
Yes Flexibility on big purchases Instead of spending a large amount in one go, with Buy Now, Pay Later services, you can break the payment down into smaller chunks over time. | ❌ Credit score impact Buy Now, Pay Later providers can report any late or missed payments to credit reporting bodies, which can harm your credit score. |