Home Australia Major changes are coming to Afterpay – see why an expert calls the app’s updated rules ‘sensible’

Major changes are coming to Afterpay – see why an expert calls the app’s updated rules ‘sensible’

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There are now two changes available in Afterpay: choosing the day your payments will be made and the option to defer your first payment for up to two weeks (for selected customers)

Major changes have been made to Australia’s most popular buy now, pay later (BNPL) service, Afterpay, with one expert calling the adjustments “sensible”.

Under Afterpay’s terms of service, all customers can now choose which day of the week their installment is debited from their account.

Currently, the day of purchase automatically becomes the day on which all future biweekly payments are based.

In another change, select customers will be given the option to delay their first payment for up to two weeks on eligible orders.

In an email to all customers, Afterpay said “more customers” will now be able to use the benefit.

There are now two changes available in Afterpay: choosing the day your payments will be made and the option to defer your first payment for up to two weeks (for selected customers)

Australian shoppers have embraced Buy Now, Pay Later (BNPL) schemes, but as of March this year, 20 per cent of consumers have paid a late payment fee, according to Finder (stock image of shoppers).

Australian shoppers have embraced Buy Now, Pay Later (BNPL) schemes, but in March this year, 20 per cent of consumers have paid a late payment fee, according to Finder (stock image of shoppers).

“We can decide whether to grant you access,” the service said.

‘When deciding this, we take into account a variety of factors, including how long you have been with Afterpay and your payment history.

“We may remove access if you have not made a payment on time or where it is reasonably necessary to do so.”

Afterpay said the change allowing customers to choose the day their payments are due was to help consumers manage their “finances more efficiently”.

Even if customers don’t choose a preferred payment day, a default one will be given to the buyer, but they can change it.

Andrew Grant, associate professor at the University of Sydney Business School, said 7 news He believes this change is a “sensible option,” as long as customers choose the day they receive payment or shortly after.

“One of the main reasons for late payments, which result in default fees and late fees, is due to mismatched payment cycles,” he said.

Grant said it will “reduce the risk” of Afterpay trying to collect money by direct debit when people are low on cash before payday, adding it should help with shoppers’ budgeting.

One expert said the switch to Afterpay, where consumers can choose which day they want their payment to be deducted, will help Australians budget.

One expert said the switch to Afterpay, where consumers can choose which day they want their payment to be deducted, will help Australians budget.

But Grant noted that the option to delay the first payment for up to two weeks will likely require customers to undergo a credit check before qualifying.

‘For ‘low risk’ consumers, whether identified through their credit history or a sequence of good payment history with Afterpay, giving them the option to defer their first payment for up to two weeks would be similar to other forms of credit. “Mr Grant said.

The associate professor said there could potentially be a higher risk of “bigger” bad debts, such as customers now defaulting on 100 per cent of payments instead of 75 per cent.

Australians to accumulate A$25.8 billion in payments for BNPL services by 2024

Australians to accumulate A$25.8 billion in payments for BNPL services by 2024

But Grant said this bad debt could be offset by getting more customers and the company carrying out careful credit checks.

According Discoverertwo in five Australians (40 per cent) had used a BNPL service in the period from October 2023 to March 2024.

“Generation Z and millennials are the most likely to use BNPL services, with 52 percent and 59 percent using BNPL respectively (March 2024 data),” he said.

As of March this year, a whopping 20 percent of BNPL users have paid a late payment fee, up from just five percent in 2020.

Australians have embraced BNPL services and now rack up billions of dollars in transactions annually.

Payments are expected to reach A$25.8 billion in 2024, reported yahoo.

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