With traditional credit card usage trending downward, the world is looking to Buy Now, Pay Later (BNPL) service providers to fill the void of credit spending.
As more Australians are forced to rely on smaller income streams, they must find payment options that work for their new reality. This leaves plenty of room for Buy Now Pay Later companies to step into the market and offer Australian consumers a sensible way to spend in 2020 and beyond.
Buy Now Pay Later companies actually profit from the consumer being able to pay their bills, which is the opposite of how traditional lenders make money. This new fintech model involves fees on sales being applied to the merchant instead of the buyer.
An increasing number of Australian’s are making the switch to BNPL, feeling that the easy payment installments are more manageable for the millennial mindset when compared to other credit streams interest-based models. The bite-sized payments offer an easy-to-manage bill that’s coordinated by the shopper and payment company prior to purchase, making consumers feel involved in their own credit decisions.
According to Zip CEO, Larry Diamond, customers are continuing to increase their online spend, and attributes Zip’s rise to it being a better and fairer, digital alternative to the credit card.
“Data from the recent quarter continues to show the demise of the credit card model,” says Diamond.
Read More: Global FinTech Series Interview with Gary Hagmueller, Chief Executive Officer at CLARA analytics
Now, with the addition of innovative tap payments such as Tap & Zip, Buy Now Pay Later companies are moving into new markets. This emerging service allows consumers to use their BNPL accounts to pay at physical checkouts. In the case of Zip, that’s everywhere a Visa card can be used. This also shows that while younger Australian’s are opting out of traditional credit sources, credit companies like Visa are finding ways to stay in the game via BNPL partnerships.
BNPL players have proven their ability to adapt quickly and be innovative to an ever-changing market. While Australians continue to test payment systems and decide what’s best for them in this new era post-COVID-19, all the evidence seems to indicate that Buy Now, Pay Later is here to stay.
Read More: The Future of Small Business Lending Is Here– And It’s Digital!
