Afterpay is facing scrutiny for its new subscription service that sees the BNPL provider teaming up with Apple Pay and Google Pay to make its services more accessible than ever.
Australia’s biggest buy now, pay later (BNPL) provider, Afterpay has unveiled its new subscription service ‘Afterpay Plus’ that costs customers $9.99 a month. It links Afterpay accounts with Apple Pay, Google Pay or Samsung accounts, opening up the market for shoppers to use Afterpay anywhere that accepts those digital wallets.
According to the Afterpay website, “Afterpay Plus is a subscription that gives you access to pay in 4 interest-free instalments almost anywhere Apple Pay, Google Pay or Samsung Pay is accepted. Afterpay Plus subscribers receive an upgraded digital card that lives in their digital wallet, and provides access to use Afterpay in more places than the standard Afterpay Card.”
Afterpay Plus is currently available on an “invitation-only basis” with the service set to be released for wider use to existing customers later this year.
However, the BNPL provider is facing scrutiny from Financial Counsellors for the accessibility of these loans with more Aussies using BNPL services for necessities rather than just discretionary items.
CEO of Financial Counselling Australia, Fiona Guthrie, outlined her concern to CHOICE. “You’ll just be able to use your Afterpay Plus card because it’s just tap and go and I guess the more seamless it becomes, the less people kind of stop and think about it as a product and taking out a loan,” she said.
Recent Power Retail data has found that more than 45 percent of shoppers have used a BNPL option for payment in the last 6 months and almost 75 percent are likely to shop from a website that offers BNPL options.
CHOICE head of campaigns and mobilisation, Andy Kelly, said “BNPL loans are still poorly regulated and don’t come with the same consumer protections as other forms of credit, such as requiring lenders to conduct safe lending checks and to have good financial hardship policies for people doing it tough.”
Afterpay has defended itself in response to the scrutiny. It noted that in the second quarter of 2023, 95 percent of Afterpay instalments were paid on time and 98 percent of all purchases incurred no late fees. “This is in stark contrast to the credit card industry, which benefits from customers not paying their balances in full and revolving in long-term debt,” a spokesperson from Afterpay told The Sydney Morning Herald.
“We will continue to start all new Afterpay customers on a low limit,” the spokesperson continued. “And because Afterpay Plus is only available to existing customers, subscribers to Afterpay Plus will have their same spending limits applied to help ensure safe use. The product will always be interest free and include safety features such as capped late fees, transparent repayment schedules and SMS payment reminders.”
In May, the Federal Government proposed new legislation that will require BNPL organisations to conduct credit checks on customers as the services will be regulated as a consumer credit product. Under the proposed legislation, there will be standardised requirements for the companies to employ internal and external dispute resolution, offer hardship provisions to struggling customers, and tougher rules on marketing. This regulation requires BNPL products meet modified Responsible Lending Obligations under the Credit Act to determine unsuitability, combined with a strengthened Industry Code. Details and legislation is set to be drafted for industry consultation and a Bill to be introduced by the end of the calendar year. Afterpay welcomed the proposed regulatory framework. “We look forward to working with the government, consumer groups and other stakeholders to get the details right in the coming months and build on the many consumer protections we already provide and set high industry standards across the board for all providers of a BNPL service,” an Afterpay spokesperson said in May.