What are the main buy now pay later apps in 2024?

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There was a time less than a decade ago when you couldn't move for mentions of buy now pay later (BNPL). Retailers were jumping on board left, right and centre. There were ads everywhere. And even the smallest fluctuations in Afterpay's share price seemed to garner headlines.

Fast forward to the present day and it's fair to say that the novelty has worn off to some degree, but that doesn't mean that buy now pay later isn't still being used by plenty of people.

buy now pay later platforms afterpay

Just over two in five Australians (41%) used a buy now pay later service in the six months to September, according to the latest research from comparison website Finder.

On average, Australians do appear to have cut back on their spending with BNPL though. Finder found that, as of last month, the average BNPL user's balance was $964 - down from a peak of $1776 back in January 2022.

What hasn't changed is the popularity of the buy now pay later among particular demographics.

"It's predominantly younger Australians that go for these products - so mainly Gen Z and Gen Y, then the usage rates drop down as people get older," says Graham Cooke, head of consumer research at Finder.

"That's who the advertising has been targeted at, even when you go to the counter in stores. Another reason it's been popular with younger people is that it enabled them to access credit without, oftentimes, having to go through a credit check and jump through all of those hoops."

What are the main buy now pay later platforms?

In 2014, Afterpay - which is arguably Australia's most well-known and successful buy now pay later service - was launched. That was followed by a host of other BNPL offerings from other players, including the likes of Zip, Humm, Klarna and plenty more.

Cooke says that Afterpay and Zip continue to be the major players in Australia, but that the market has expanded from its earlier days to include tens of different providers with diverse product offerings.

Of course, each provider has its own spending limits, late fees, features and participating retailers. So to provide a glimpse of how they compare, here's how four of the better-known options stack up.

While it was fintechs that pushed BNPL into the limelight as a payment option, banks and credit card companies have since taken to the idea.

The Commonwealth Bank (StepPay) and NAB (NAB Now Pay Later) are among the traditional banks with their own standalone buy now pay later offerings, while many others have incorporated BNPL-like payment structures into their credit and debit cards.

For instance, American Express has a 'Plan It' feature which allows card users to pay off their transactions or a portion of their balance in equal monthly instalments. Unlike traditional credit card debt there's no interest involved, but the trade-off is that there are fixed monthly fees.

"Going back a few years we saw that as buy now pay later rose as an option, there was a huge drop in the credit card market at the same time. What then happened was credit card providers, and others, basically started copying what buy now pay later did and offering it as a form of payments.

"So the service is more diversified than it was before and the market isn't as dominated by the big two in Afterpay and Zip as it once was."

What's happening with buy now pay later regulation? 

As Cooke mentioned, one of the appeals of buy now pay later in its early days was the ease with which people could sign up. That's because it wasn't regulated as credit, meaning users didn't have to pass the same kind of checks required of products like credit cards.

That has created issues though - issues that have been frequently raised by those in the consumer advocacy space. For example a survey from Good Shepherd in 2022 found that 84% of financial counsellors had clients who had entered a debt spiral after opening multiple BNPL accounts.

In June, the government announced that buy now pay later would be brought under the Consumer Credit Act and regulated as a form of credit though. This was to ensure that users are subject to checks and given the same kind of protections that apply to other credit products.

Elsa Markula, chief executive at Arca (formerly the Australian Retail Credit Association), says that the government's decision was a welcome development.

"The regulation of buy now pay later is just about adding to the clarification that buy now pay later is a form of credit where a form of responsible lending obligations will apply. It also means that we will see other features like credit checks become standard for buy now, pay later products."

So where are we at in terms of regulation actually taking effect? Markula says that the passing of legislation needed to regulate buy now pay later is imminent.

"The legislation was actually listed to go to the Senate this week, but I think consumers can expect to see something come through - probably by the end of the year, and the legislation will take effect six months from then."

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Tom Watson is a senior journalist at Money magazine, and one of the hosts of the Friends With Money podcast. He's previously worked as a journalist covering everything from property and consumer banking to financial technology. Tom has a Bachelor of Communication (Journalism) from the University of Technology, Sydney.