Buy-now-pay-later services like Afterpay have seen a surge in popularity as cash-conscious Australians look for new ways to stretch every dollar.
The controversial platforms allow customers to pay for goods in instalments, and are now used by 30 per cent of Australians, according to new data from consumer comparison site Mozo.
Mozo’s data also shows that half of that cohort – about 2.9 million Australians – are resorting to these services to cover the cost of essential goods such as food.
Clothing accounted for 30 per cent of buy-now-pay-later (BNPL) transactions, maintaining its position as the most popular spending category for BNPL services.
But this was followed by groceries and food and beverage spending, each accounting for 12 per cent of transactions.
Worryingly, the company also found 70 per cent of BNPL users feel financially stressed by the purchases they’ve made using the services.
“Buy now pay later can be a good way to manage your cash flow, but before you make a purchase, weigh it up and ensure it suits your financial situation,” Mozo director Kirsty Lamont said.
The data comes as new figures point to Australia’s unemployment rate hitting double figures before the end of June.
Deloitte Access Economics have already warned unemployment will likely stay above pre-coronavirus levels until 2024, weighing on incomes and wages growth.
Australians look for new ways to stretch their money
Simon Bligh, chief executive of data analytics firm illion, told The New Daily increased use of BNPL services is part of a broader shift to more prudent consumer behaviour.
Numbers compiled by the company in collaboration with Accenture-owned data company AlphaBeta shows Australians are moving towards better value products when shopping.
They are also exploring new ways to improve their savings and cash flow, as the fallout from the coronavirus pandemic weighs on consumer confidence, Mr Bligh said.
“Australians are refinancing their mortgage, churning their electricity providers, shopping for lower-value brands,” he said.
[They’re also] making more use of things like BNPL – That doesn’t necessarily save you money but it defers you paying.
“People are being rightly very cautious.”
And although BNPL usage has grown across all income brackets, illion found higher-income households were adopting the services at a faster rate than their lower-income peers.