“There’s no hardship or protections with BNPL if you get into trouble” – True or False?
There’s a consistent theme in regards to BNPL which often pits it as a predatory consumer product that doesn’t care for its users. The reality couldn’t be further from the truth. BNPL needs its users to have a good experience for it to maintain. We thought we would take a look into the idea that “There’s no hardship or protections with BNPL if you get into trouble”.
In terms of protection, it’s important to always remember that most BNPL providers’ major incentive is to keep customers using their service. So how do they do that if they prevent people from using their product as soon as they miss a single payment? By taking every step possible to prevent that from happening!
Responsible spending rules and consumer protections are built into BNPL providers’ service – unlike traditional credit, these rules help ensure customers never “revolve” in debt, no exceptions. Revolving in debt is about as bad as it sounds – it means you are paying 20% interest and carrying your credit card balance from month to month. Which is how credit card companies make their money (and why you get measly “reward points”).
For customers who find themselves in trouble, BNPL providers like Afterpay offer a hardship program where flexible payment timelines with no additional fees or cost can be agreed upon. Afterpay has never enforced a debt nor does it sell debts to collection agencies.
In addition, recent research by Accenture, commissioned by Afterpay, identified a number of benefits to Australian consumers of using Afterpay in 2020, including:
- 90% of users said that Afterpay helped with budgeting.
- Consumers saved $110 million in fees when using Afterpay instead of credit cards.
- Vulnerable consumers gain the most from switching from credit cards to Afterpay. The most vulnerable credit card users pay up to 7 times more in fees than compared to Afterpay users