Buy now, pay later payment services allow you to delay payment or pay by instalments (often fortnightly) over a period of time.

Here we explain how these payment services work, what fees you’ll
pay and how to avoid getting into financial trouble if you’re using
these services.

What is buy now, pay later?

Buy now, pay later services such as Afterpay, Certegy and zipPay
are offered by approved retailers and allow you to order or
purchase a product immediately and delay payment. You then pay off
the product in instalments over several weeks – or, with some
service providers, over a longer period of time.

How do these payment services

Buy now, pay later services are available when you shop online
or in store through approved retailers and is simply another
payment option at the time of checkout.

You will need to provide your banking or credit card details the
first time you use these services so your payments can be deducted.
You may also be required to pay either a deposit or the first
instalment up-front.

Depending on the provider, you may need to generate a barcode or
unique 6-digit number using the provider’s mobile application or
website. The retailer can then scan the barcode or type the number
into their system to set up your payment.

Are buy now, pay later services
worth it?

Buy now, pay later services are often advertised as
‘interest-free’ or ‘0% interest’, but the cost will add up if you
can’t make the repayments on time.

Smart tip

Always check the terms and conditions before you sign up, as
they can be different for each buy now, pay later service.

Here are some things to look out for before using these

  • Late fees – There’s usually a late fee every
    time you miss a payment or pay late. These fees can add up over
    time and are charged each time you don’t make a payment.
  • Monthly account-keeping fees – Some of these
    services charge you a fixed amount for every month you continue to
    use their service.
  • Payment processing fees – You may be required
    to pay a fee for each payment, on top of your set repayment.

Case study: Mai struggles to make ends meet after using buy
now, pay later services

Mai loves her online shopping. In the lead-up to Christmas, she
decided to take advantage of some markdowns by buying a couple of
items online.

She found a new pair of designer sneakers worth $150. As Mai was
a bit tight on money, she signed up to a buy now, pay later service
to split her repayments. She then found a hair straightener at a
reduced price of $300 at another online store. Mai used a different
buy now, pay later service to buy the hair straightener and stretch
out her repayments.

A fortnight later, Mai discovered that her bank account was
overdrawn. She then realised she had not checked before buying the
items if she would have enough money in her account to make both

Mai was not only charged default fees by both buy now, pay later
providers, but her bank also charged her an overdrawn fee.

Is your credit history or ability to repay checked?

Most buy now, pay later providers do not check your ability to
make repayments or your credit history. This means you could end up
taking on more credit than you can afford and could have trouble
making your repayments.

Making a complaint about
buy now, pay later services

Most buy now, pay later providers have dedicated complaints and
hardship services. You should contact your provider to discuss your

Some providers do not belong to an approved external dispute
resolution scheme, so if something goes wrong you may not be
able to have your complaint heard by an independent party.