BNPL transaction values in Australia and New Zealand 2020

In 2020, Buy Now Pay Later (BNPL) transaction values by selected providers in Australia and New Zealand crossed 10 billion Australian dollars. BNPL systems have become popular as they allow customers to purchase a product immediately but pay it off in installments. The repayments can be interest-free or with minimal interest, however, late fees may accrue if repayments are not made on time. Afterpay led the race with more than eight billion Australian dollars in BNPL transaction values and millions of active BNPL users.

 Afterpay Limited 

Afterpay is an Australian financial company that offers BNPL services both in-store and online. According to a recent survey, Afterpay was commonly used to pay in stores, restaurants, and other points of sale with smartphones in Australia. While Afterpay was launched in 2015, the company’s sales have already exceeded 6.5 billion Australian dollars across Australia and New Zealand. Afterpay also operates in the United States, the United Kingdom, and Canada.

 What’s in store for BNPL

From the consumer perspective, there are a lot of benefits to the BNPL payment model. They only pay a small portion of the cost of a product to get it immediately, and often the repayments are interest-free. The flexibility of how frequently payments need to be made gives BNPL an advantage over credit cards. For retailers, the potential to generate more revenue and attract new customers have incentivized the use of this payment model. The trade-off, however, is that processing fees from BNPL transactions are higher than a typical Visa or Mastercard transaction, and this cost is passed on to the store. Nevertheless, the number of BNPL active merchants across Australia and New Zealand totaled almost 90 thousand.