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COMMENT: Think twice about Afterpay

Mari Spanja, Reporter

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This year Afterpay has recently appeared in many stores I shop at around Perth.

The digital service makes it possible for a consumer to buy something now and take it home while paying it off later in four equal instalments.

So far 31,000 stores including Big W, Cotton On and Myer have used the system.

As an employee of a retail store issuing these short-term loans, I have just learnt how to process these payments, and I worry that so much could go wrong.

With previous laybys, you had to complete all your payments before you received your goods. This was fair and made sense, you got what you paid for.

But with Afterpay’s ‘buy now and pay later’ offer, it seems profoundly too good to be fault proof.

How does Afterpay work?

According to the company’s website, Afterpay doesn’t charge customer’s interest, establishment or monthly fees and most of Afterpay’s revenue comes from charging retailers.

Missing an instalment results in a $10 fee and, if you fail to make the repayment within a week, another $7 fee will be charged. The idea may seem great, but with Australians more in debt than ever, we shouldn’t encourage more access to short term loans.

According to Finder, there are 16,725,534 credit cards in Australia as of June this year. From these cards there is a net debt of over $30bn that hasn’t been payed off.

The official data published by the Reserve Bank of Australia also showed that households owed debt in the March quarter equal to 190% of their yearly disposable income. This alarming record high number leaves Australians with less money to spend – and adding more short term loans is a dangerous combination.

Afterpay’s flexibility could further encourage consumers to impulsively purchase items. Statistics show that 38% of impulse buyers in Australia use credit cards. Now that Afterpay is making it more accessible to buy with the phone application at the counter, this number could rise.

Not only is Afterpay tapping into products, but more expensive holiday services too. Jetstar just released its partnership with Afterpay this month, allowing customers to fly domestic flights costing from $200 to $1,000.

It is creating this image that it’s okay to purchase things you can’t afford, and still have ownership without paying. This system is just another way of giving people access to credit and statistics show consumers aren’t ready for more.

I feel a sense of pride in saving my money to purchase a leisure item. The fact that I worked for it and I know it’s 100% mine is hugely rewarding.

So perhaps do yourself a favour, if you can’t afford it.

Just don’t buy it.

 

 

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Quality journalism by ECU students
COMMENT: Think twice about Afterpay