Beyond Afterpay: New ways to buy now pay later

Photo by Meghan Schiereck on Unsplash

From impulse saving to property credit, here are some of the new ways you can buy now pay later.

Since the launch of Afterpay in 2014, buy now pay later (BNPL) has taken hold in Australia. And it shows no signs of slowing down. The number of BNPL transactions increased 90% in the 2018-19 financial year up to 32 million transactions. We're also spending more per BNPL transaction, with the average spend per person increasing from $271 in September 2019 to $589 in August 2020.

Now, the BNPL landscape is being extended beyond Afterpay, Zip, Klarna and Humm, and these new players are changing the game entirely. Let's look at some of the new types of BNPL products and how they stack up.

Splitit

Splitit lets you make purchases and pay in instalments using a credit or debit card. When you make a purchase using Splitit, it holds the full amount on your card and deducts it over instalments. You never get charged interest or late fees and there will be no impact on your credit score.

• Verdict: Splitit offers a good alternative to existing BNPL products. There are no late fees, no impact on your credit score and it uses your existing credit or debit card. Better yet, you can still earn credit card rewards points when you use Splitit.

Bricklet

Bricklet is a fragmented investment platform, which is similar to fractional investment platforms, letting you purchase parts of a property (bricklet) as an investment. The main difference is that with fragmented property investments you are actually registered on the Torrens Land Title as the owner of your fragment. Bricklet lets you purchase these bricklets upfront and pay them off over 18 months. Using this option, you'll need to pay 10% of the bricklet price upfront with the remaining amount paid over 18 monthly instalments.

• Verdict: The BNPL option with Bricklet is great because it lets you start earning rental income through your investment while you're still paying it off. You just need to pass a simple affordability check to see if you're eligible.

Limepay

Limepay is an alternative to Afterpay and Zip directed at retailers. Instead of setting up Limepay as a payment option for the retailer, it allows them to create their own deferred payment option. EB Games is one retailer that's set up with Limepay. It now offers its own bespoke payment option bl!p to customers at the checkout.

• Verdict: Limepay gives some of the power back to retailers with its bespoke product. Retailers can brand it, access full reporting and behaviour insights and have their customers stay within their own ecosystem to make the payment.

Nudge

Nudge is trying to turn impulse buying on its head with its own version of "impulse saving". When you sign up to the app, you create a profile and a savings goal which is shown in the form of a tiled image. The more you save, the more tiles are removed, revealing more of your goal.

To help you reach your goal Nudge sends you, well, nudges. You'll receive prompts from the app asking if you'd like to save amounts that average out to a figure set by you. You can either decline or accept, and if you accept the app saves for you.

• Verdict: This is a great way to save for something specific, whether that's a holiday or an outfit. The nudges will work great to help you reach your goal. However, you don't earn interest on your savings as you would with a normal savings account.

Commbank AdvancePay

In the first week of December 2020, Commbank quietly launched its version of a BNPL product called AdvancePay. It's essentially an overdraft that you can organise before your account actually becomes overdrawn and which you repay in about a month. You can access between $300 and $750 for a fee of between $5 and $10, depending on how much you request.

Payments aren't made in instalments like with other BNPL products. Instead, the entire amount will be deducted from your account on a day you choose.

• Verdict: AdvancePay is a good option if you need to make a purchase but won't receive your pay for another week or two. You don't need to worry about your credit score being affected and your employer also won't be notified. Just make sure you'll have enough money in your account when it comes time to repay.

Reel

This is a US platform that isn't available in Australia, but it's worth a mention. Reel lets you choose an item you want to buy, such as a dress or a bag, and then helps you save up for it. You just need to select how much you want to save each day or week and it will make automatic contributions from your bank account towards your goal. You can track your progress as you save, and when you reach your goal, Reel will make the purchase for you.

• Verdict: This is another great savings tool that helps you save for something specific. By showing your progress towards the purchase and automatically saving for you, you might have more success in reaching your goal than compared to saving the traditional way. However, there is no interest earned on your savings.

Cashmere

This is another overseas option, this time from the UK. Cashmere operates in the luxury designer space, helping people save for specific purchases. You browse the app and choose what you want to purchase, then Cashmere will recommend what you need to save based on your taste and budget. It helps you save by automatically deducting from your bank account. Once you've reached your goal, you place the order through the Cashmere app.

• Verdict: Cashmere is a great tool for designer lovers. Not only does it help you save but it also helps teach good financial behaviour and ways to save more. The downside is you won't earn interest on your savings and there is a £3.50 charge to make a purchase using the app. However, if you want help saving for an expensive item, this is still a useful and relatively low-cost way to do it.