Are you being smart this silly season? Shop now, enjoy now and pay later.

This Christmas will be a bit different for many Millennial and Gen Z’s globally. The buy now, receive now and pay later revolution has taken the world by storm. Afterpay is just one of the buy now, pay later service companies and it already has over 6 million active customers with 15,000 new accounts opening daily and over 40,000 retail businesses from clothing, travel, experiences and health are offering this type of layby service[i].

What are the benefits of buy now, pay later?

Unlike layby where a customer puts goods on hold that they could not otherwise afford. Buy now, pay later allows customers to receive their goods with a small down payment and future interest-free instalments. The majority of the purchase is other people’s money, but you’re not forced to save and wait.

The service is “free” to the consumer but the costs associated are priced into the product as the service company takes a small cut from each transaction. Retailers pay for the service.

Why would a retailer allow this type of payment?

Retailers want to do business and have seen an increase in average basket size and people shopping more frequently. It’s estimated that retailers have seen more than a 25% increase in transaction values[ii].  Or put another way, users of this payment service are spending more money than they have.

Here are 3 tips to help you avoid a small initial late fee and spend 25% less this Christmas

  • Use cash to pay for Christmas gifts
  • Get your family, friendship group and workplace to embrace Secret Santa. It’s the idea of only gifting to one person
  • Set dollar limits in addition to Secret Santa

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

[i] 2019 CEO and CRO Presentation (afterpay touch)
[ii] FY2019 Results Presentation (afterpay touch)