KEY FINDINGS:
61.97 percent of respondents use BNPL services, with usage peaking at 69% among 25-54-year-olds.
30.95 percent of users apply BNPL for everyday essentials, including groceries and fuel.
6 percent of consumers aged 35-44 report daily BNPL usage for essential purchases.
High-income earners (>$200,000 annually) increasingly adopt BNPL as a budgeting tool.
XXXXX July 2024 - New research by Compare Club reveals a significant shift in Australian consumer behaviour, with Buy Now, Pay Later (BNPL) services emerging as a crucial financial tool for everyday expenses. Nearly one-third of Australians now use BNPL for essential goods like groceries and fuel. While supermarkets and petrol stations don’t allow BNPL directly, many people buy gift cards and use them online and in-store to get around this.
"BNPL has become deeply ingrained in Australians' financial toolboxes. It's no longer just for impulse buys or big-ticket items. For many, it's becoming necessary for day-to-day living right through to paying for expensive but necessary dental care,” says Compare Club's Head of Research, Kate Browne.
“The big brand supermarkets don’t offer BNPL direct at the checkout. It’s possible to buy gift cards from BNPL providers for major supermarkets, petrol stations, home delivery apps, and more. Customers can then use those gift cards in-store or online to pay for groceries, food, and fuel.
24-year-old Michael Stevens from Victoria uses multiple BNPL services. He says, “When I started using services, I was trying to cover larger expenses like car repayments, but then I started using it for everyday expenses like groceries and clothing.”
“Originally, it was a one-time thing, but that’s slowly progressed to using them all simultaneously. The rising living costs have made it hard to afford the most basic things. But it’s a trap; it’s not extra money. I tend to think of it as a short-term loan.”
The Compare Club study found that six percent of consumers aged 35-44 report using BNPL daily for such purchases.
Surprisingly, individuals earning over $200,000 annually use these services more frequently and often as a budgeting tool. Many use BNPL for large purchases, but there’s a rise in the number of people using it for food delivery services like Uber Eats and DoorDash.
While BNPL offers financial flexibility, it also presents risks. Nearly a quarter of users report owing between $1,000 and $5,000 across their BNPL accounts at some point. Additionally, 20.07 percent of users face late fees every few months, potentially impacting their credit ratings and future borrowing capacity.
“Many people like using BNPL because you’re not credit checked upfront. However, consumers must be aware that they charge monthly and late fees, and any debt will appear on your credit rating. A bad credit score will haunt you for five years,” says Kate Browne.
"20 percent of BNPL users accrue late fees on their purchases every month. One respondent, aged 25-34 from Western Australia, reported that their entire paycheck goes directly to paying down their BNPL debt of over $5,000."
BNPL payments in Australia are expected to grow by 14.8 percent annually to reach US$16.84 billion in 2024**. Much of their growth has come from seamless payment integration across various products.
“Credit Cards can be a slippery slope, but at least there are more limitations about who can use them. With Buy Now Pay Later, you can access the cash in half an hour. I treat it as financial assistance,” says Michael Stevens.
“While BNPL doesn’t attract interest, it can be helpful if used responsibly; there is a real risk of accumulating far too many payments and losing control. While credit cards might be viewed as equally risky, balance transfer credit cards can be a good way to take control of your debt. These cards can provide users with up to 36 months interest-free to pay back debt without incurring interest, but like all debt, the trick is to make sure the money is paid back within the period. If you are struggling with debt, speaking to a financial counsellor can greatly help - they provide free, independent, and confidential advice.
-ENDS-
NOTES
*1000 people surveyed
**Australia Buy Now Pay Later Business and Investment Opportunities Databook Q1 2024 Update. ResearchAndMarkets.com
***The numbers relate to all the platforms used, eg: a single user may use numerous platforms.
For media enquiries:
Jasmine Kostas
Media + Capital Partners
0425 327 224
jasmine.kostas@mcpartners.com.au
About Compare Club
Compare Club is one of Australia’s fastest-growing personal finance marketplaces. It helps Australians save money by navigating complicated and important financial decisions. Compare Club’s panel of experts offers bespoke advice to over 3.6 million members making 1 million product enquiries per year on key financial decisions, including health insurance, electricity and gas bills, and personal, car, and home loans. Compare Club is locally owned and employs 350 passionate staff across Sydney, Melbourne, and Brisbane, as well as another 50 staff in Indonesia and the Philippines.
