By Aimee Shaw
9 Sep, 2018 2:00pm
Buy-now-pay-later schemes have proven popular in New Zealand with 220,000 Kiwis signed up to just one of the four companies operating locally.
Laybuy, like other providers, offer deferred payment that allow consumers to pay for purchases over six weeks. They do not charge interest, but do charge default fees if a buyer fails to make payments on time.
Laybuy launched in May last year and has 2500 merchants signed on to its service.
Founder Gary Rohloff said between 60 and 100 new merchants sign on each week from clothing and footwear retailers through to travel agents and ticket sellers.
Some hairdressers and health spas also accepted it as payment option.
“It’s still clothing and apparel that is very popular, and travel is particularly popular,” Rohloff said.
“It has become a very popular way for people to purchase.”
Apparel and clothing purchases make up 60 to 70 per cent of all Laybuy sales with an average transaction spend of $130.
Laybuy offers payment of goods and services over six weeks. If weekly payments are missed there is a default charge of $20.
“We have two groups of consumers using Laybuy,” said Rohloff. “We have the millennial group which is a bubble in our database from about 22 to 32 years of age and then we have another bubble that is aged over 45 years.”
Retailers using the payment service include Glassons, Hallenstein Brothers, North Beach, Storm, Stirling Sports, Barkers and Ruby, among others.
Rohloff said there was huge potential for the buy-now-pay-later market.
“It also gives young people, particularly those who are looking to get themselves on the credit scoring radar who don’t like credit cards… it gives them a chance to establish a credit score.”
There are four buy-now-pay-later companies operating in New Zealand; Afterpay, PartPay and Oxipay, with Laybuy the dominant player.
These companies do not fall under the Credit Contracts and Consumer Finance Act.
Consumer NZ head of research Jessica Wilson said buy-now-pay-later schemes, which are unregulated and not part of lending law, were a concern.
“Our main concern has been the risk to consumers getting into debt and then potentially having extra default fees adding on to the amount they need to pay back, and also, how that might affect their credit score,” Wilson said.
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