Buy now pay later

Buy Now Pay Later Schemes: Everything You Need To Know

It’s no secret that the world of e-commerce has a lot to offer. For starters, there are so many ways to make pay for goods whole shopping online. New concepts and trends are coming up each and every day. You have probably heard of some new payment schemes called Buy Now Pay Later. These schemes also go by other names such as Instant Financing Services or Interest-Free Instalments. So, what are these new e-commerce offerings all about? What do they have to offer to consumers? And, most importantly, are they worth trying out? These are some of the questions we will try to address in this article. Read on to learn more about Buy Now Pay Later services in Australia.

Online Shopping

Online shopping is getting bigger by the day. Recent surveys show that more than 50% of Australian consumers shop online. These are some huge numbers that should not be taken lightly. However, online shopping has its own challenges. Many online shoppers often visit multiple e-commerce websites and end up making no purchases at all. Why is this? Well, it could be that they didn’t find what they were looking for. But, this is highly unlikely as there are plenty of products and services to choose from on the web. The only other credible reason is that they didn’t have enough funds to make the purchases they wanted.

Poor Online Sales

Poor online sales have prompted online businesses and retailers to come with new and innovative ways to convert prospective customers into leads. Most online businesses currently employ a wide range of sales and marketing strategies that are all aimed at increasing sales. Some of these strategies include offering flexible payment methods, fast shipping, optimising their websites and simplifying the shopping process. These marketing strategies seem to work for most enterprises, but not all. Many Australian businesses are still struggling to get consumers to spend on their goods and services. This is especially true for businesses that deal in expensive or high-price commodities like household appliances and furniture.

Buy Now Pay Later: What Is It All About?

As mentioned above, online payments are a big topic in the world of e-commerce. Currently, there is a lot of hype in the fin-tech industry about instant financing or ‘buy now pay later’ schemes. So, what are these schemes all about? Well, buy now pay later schemes are special online payment options that give consumers the chance to choose how and when they wish to pay for goods and services. However, when they do choose to pay, the businesses they buy from are paid upfront, leaving the rest to instant financing providers. So, instant financiers act as a go-between between merchants and consumers, creating a sought of win-win situation for both parties.

With the ever-growing availability and popularity of ‘buy now – pay later’ options, there also arises some confusion about the entire subject. So, to make it clearer to understand – instant financing is simply an alternative payment option that businesses can offer their clients and customers. This payment option allows customers to pay a certain amount in instalments over a specific period of time. Currently instant financing options come in 3 main forms namely; Pay in 30 days, general financial or interest-free instalments. Let’s have a look at each of these.

Interest-free instalments

This payment options allows consumers to split their payment for goods and services into several instalments to be paid over an extended duration of time. Each instalment is deducted from the card that the customer used during checkout. In most cases, the customers pays the first instalment at the time of purchase, and then the remaining instalments are spread out in the course of the coming weeks and months. As you can already tell, both consumers and merchants benefit from this payment option. First, consumers get the chance to buy their preferred goods and services on hire purchases basis, but at no additional cost. On the other hand, merchants get the entire payment for goods and services sold, while leaving the rest of the work to the financier. At the end of the day, more sales are achieved which is also good for the merchant.

Speedy Credit

Because buy now pay later schemes are essentially credit offerings for consumers, it’s important to acknowledge the time it takes to secure a loan using these options. In Australia, instant financing providers like AfterPay and zipPay allow online shoppers using instant financing to checkout almost as fast as other consumers who are paying using debit or credit cards. This means that consumers do not have to go through lengthy credit checks and other time-consuming processes to get the financing they need. Simply put; buy now pay later payment options give consumers, especially those with poor credit – the flexibility and freedom to choose when and how they want to pay.


Financing is not so different from ‘interest-free instalments’ The major difference between the two is that financing offers consumers the ability to pay over a longer duration of time which is perfect for more expensive goods. For instance, you can buy the refrigerator that you have always wanted and pay for it over the course of 12 to 36 months. How cool is that?

This payment option offering consumers the chance to buy online and pay for the goods at their own pace. And similar to interest-free instalments, financing is excellent for people with poor credit or people who don’t own or don’t like to use credit cards. Because, let’s face it, not everyone owns a credit card out there today.

Pay In 30 Days

The last type of buy now pay later scheme is ‘pay in 30 days’. This is the most basic form of instant financing. It allows consumers to get the products they want and try them out within 30 days before paying for them. This payment option is mostly used for fashion products. It basically allows consumers to bring the fitting room right into their homes. consumers can try out products within a couple of weeks, and at the end, they will only pay for what they choose to keep. Mind you, there is no interest charged on the final payment.

How ‘Buy Now Pay Later’ Is Transforming Online Shopping

If you sell your goods online, your target audience is probably composed of millennials. These are grown-ups who are not really grown-ups. These are tech-savvy people who are not too rich but not poor as well. They are the main drivers behind the booming online shopping industry. It’s important to note that millennials are not big fans of loan/credit facilities such as credit cards. Most of them shun them because they associate them to debt and bankruptcy. Now, this is where ‘buy now pay later’ schemes come into play as they are perfect for millennials who want to buy as many products as they can without having to take up huge loans.

The Future

The Australian market is currently booming with competition at an all-time high. Businesses are in an all-out war for consumers who are mainly millennials or people aged between 18 to 34. Businesses that are keen enough to notice this are coming up with new and innovative ways to reach out to this target audience. Just to mention, millennials are currently the hardest-to-reach group of consumers in the world. Nobody can seem to predict exactly what this demographic of consumers want. The few that are successful at doing attribute it all to luck. But, who wants to rely on luck in the current times we live in.

Millennials don’t do credit cards

All hope is not lost however. The best way to reach out to a specific target audience is to understand it. Understanding people born between 1980 and 2000 only takes some patience and research. First, you need to know that this demographic is mainly made up of cash-strapped teens, twenties and thirties. This is a group of people that are not big fans of the credit industry as it is today. They value cash above anything else. Recent studies show that only 1/3 of this demographic owns credit cards. They mostly prefer using debit card and buy now pay later schemes.

How Does Buy Now, Pay Later Work?

So, at checkout, customers are given the option to get their good or service, but pay for it in small instalments over a specific duration of time. Merchants usually pay the scheme financier a small commission for each sale and that’s it. The customer does not pay any interest charges whatsoever. Also, the merchant gets paid up-front meaning they can continue running their business and restock the goods they sold. This is a win-win for everyone.

Benefits For Consumers

This blog post would not be complete without listing the clear and indisputable benefits of ‘buy now pay later’ schemes to consumers. Here are some:

  • They allow consumers to purchase products and services when and how they want.
  • They give consumers a flexible payment option that meets their individual needs and requirements.
  • They cater to people who don’t own or don’t like to use credit cards.
  • They offers ways for consumers to try out products before paying for them.
  • They allow consumers to better plan their finances by paying for expensive purchases through instalments.
  • They offer consumers more shopping freedom.

Benefits To Merchants

As already mentioned, buy now pay later schemes are a win-win payment option for both consumers and merchants. This means that merchants benefit too. Business owners have something to be happy about when they embrace instant financier or buy now pay later service providers. Some of the benefits they can enjoy include.

  • Upfront payment for goods and services sold through buy now pay later schemes.
  • Increased sales.
  • Improved customer services.
  • Higher customer retention because of happy customers.
  • Attracting more millennial shoppers to your business.


It is more than clear now that buy now pay later schemes are the future of online shopping. As economic times get tougher and people’s wallets get thinner, businesses will have to make use of innovative payment solutions to ensure that consumers keep on shopping. Businesses that fail to realise this in coming months will face a rude shock. Buy now pay later schemes are a simple and well-thought out payment solution that works for both consumers and merchants. Indeed, you can expect to see more of these payment options at your favourite stores.