What it’s like to shop using Buy Now, Pay Later

  • I made my purchases using Buy Now, Pay Later Afterpay for the first time.
  • It was easy to set up and resulted in four payments lower than my original interest-free bill.
  • While it was exciting to spend in a new way, having a middleman can be stressful.

In 2008, in the middle of the Grand

, rapper TI released a song called “Whatever You Like”.

The track is a celebration of financial irresponsibility in the face of love; an ode to spend lavishly today without worrying too much about the consequences of tomorrow.

It was this song that played over and over in my head as I embarked on my first foray into shopping using “Buy Now, Pay Later”.

I made purchases from Afterpay, an Australian fintech company that offers the option to make a purchase and pay it back over time, also known as BNPL. In the past, mainstream retailers offered layaway – where the store would keep the item until you could pay for it – today’s retailers are willing to hand over the goods while you pay the full price. over time.

Afterpay has been around since 2018 and in August it was acquired by the payments platform Square for $ 29 billion in shares, a move that stems from what Square CEO Jack Dorsey described as “a common goal. “.

“We built our business to make the financial system more fair, accessible and inclusive, and Afterpay built a brand of trust aligned with these principles,” Dorsey said at the time.

Afterpay says it now works with more than 85,000 brands and has 14.6 million+ customers. But it is one of the few BNPL companies, including Klarna and Affirm, that compete for buyers’ dollars, and for good reason: the number of consumers turning to BNPL to pay for their purchases is expected to increase by 81.2% in 2019. 2021, according to Insider Intelligence data.

With all of this in mind, I decided to give BNPL a try for myself.

The buying process

While I would like to say that I researched the merits of each BNPL provider before I started shopping, it didn’t – and I highly doubt that this is how most users approach these services either. .

I decided to use Afterpay simply because it is in partnership with Anthropologie, a company whose clothes, shoes, accessories and housewares really love. Also, knowing that Afterpay was recently acquired by Square, I had a basic level of confidence in the service.

My decision to use BNPL arose, as I’m sure many consumers, out of a desire to have new things combined with a desire not to spend a lot of money. I’m going on a 10-day vacation soon, the longest trip I’ve ever taken, and needed extra tank tops, dresses, and sandals for such a long getaway.

And so, after browsing Anthro’s summer sales, I filled a basket with seven items for a total of $ 309.65.

When I was ready to pay, the option of using Afterpay appeared – rather than paying for my purchases in a lump sum, she told me I could pay it off in four interest-free installments of $ 77.41, a much more acceptable amount on my credit card statement.

Anthropologie cart payment screen with the Afterpay option circled


After selecting the Afterpay option, I was redirected to the company’s website to complete my transaction. Once there, I entered my credit card information and agreed to Afterpay’s terms, which stated that I was responsible for the full payment without interest. My first payment of $ 77.41 was due in advance, with the next payment due two weeks after the fact, and the next two weeks after that – all in all, it would take six weeks to pay the full bill.

Afterpay set up a portal for me that showed my payment schedule and how much I still owe on this order, as well as my spending limit, instituted by Afterpay: the platform will allow me to spend an additional $ 417.71, and promised that this limit will increase over time as I spend more and pay for my purchases on time, like a traditional credit card. If I choose to do more Afterpay purchases, they will all be listed on this portal so that I can track my payments.

One thing Afterpay makes it very clear is that it can’t handle returns for you, and I was nervous: if any of the items I ordered didn’t work, would I still have to pay Afterpay? ? The short answer is no, but only because I ordered from a retailer with a fairly standard return policy – if I don’t care about an item, I can return it to Anthropologie within 60 days and Afterpay adjust my payments accordingly to reflect the refund.

It ended up coming into play shortly after I placed my order: one of the items I ordered ended up being out of stock and Anthropologie had to cancel it. Afterpay adjusted almost immediately, reducing my final payment to $ 27.47.

Afterpay account screen with a pink arrow pointing to the final payment amount


The advantages – and the potential disadvantages

It’s hard not to wonder if BNPL is too good to be true – there must be a hidden trap, right?

And the point is, there could be. Some, but not all, BNPL services will report missed payments to credit bureaus, which could harm your credit. You can also accumulate late fees, and if you stop paying altogether, your account could be sent to collections, according to Investopedia.

Afterpay says it won’t report a missed payment, mainly because most people don’t spend a lot of money through the service.

“We don’t believe in preventing people from accessing Afterpay because they may have old debt for a long time. And we don’t think missing a payment with Afterpay should lead to a bad credit history – especially when the average purchase is only around $ 150 (which may surprise you), ”the company says.

Instead, Afterpay will charge you a late fee for missed payments, which starts at $ 10 and can go up to $ 68, or 25% of the total purchase price, whichever is less. It will also pause your account until you pay.

For me, late fees are better than paying interest, but I hope that never happens, which is why I searched the Afterpay site for a way to set up automatic payments. I couldn’t find any, so I asked Afterpay about it and it turns out that the payments are automatic without you having to configure anything.

A company spokesperson explained that the day before your payment is due, you will receive a reminder to verify that you have sufficient funds for the transaction to proceed. The next day, payment will automatically be taken from the card you have on file. While I am relieved to hear that payments are automatic, it could probably be a little clearer to consumers.

A new way to spend

Afterpay, and BNPL services more broadly, are marketed as a way to provide more choice to consumers, to create a new form of financial freedom and to give buyers more purchasing power.

I have to admit it felt momentarily empowering to be able to shop the way I wanted, to spend in a new way, as the song says, “Go get it, I’ll buy it.” But what TI hasn’t rapped about, and what’s easy to forget, is that nothing is free. While BNPL is another option for consumers, it locks them into another financial relationship as well.

As someone who only has one credit card and doesn’t take a lot of financial risk, having another bill overhead actually starts to stress me out a bit – part of me is wondering if i will end up paying. in advance, what the Afterpay spokesperson told me is very common among his customers.

And while it’s nice to be able to skip a big payment, I’m definitely not saving money – I’m just fooling my brain into thought I am. In fact, I probably spent more than I normally should because the upfront payment seemed relatively small.

For me personally, BNPL seems like the perfect option for larger purchases like, say, new furniture, as it dampens sticker shocks. But for now, for those everyday purchases, maybe it’s best that I don’t have what I like.

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