Zip Pay’s “buy now, pay later” service phenomenal upsurge now boasts 10,000 retail partners and more than 850,000 customers. Bunnings and Best & Less to Target and Tigerair, are some of its retail partners to name a few.
According to Australia’s corporate watchdog, over the past three years, the number of Australians using such services has jumped from 400,000 to 2 million. Technology is the key in their continuous rising popularity making electronic payments easier and more secure, more online shopping, increasing distrust of banks and younger people shying away from credit card use.
How Zip works
Zip offers two different products, Zip Pay offering credit up to $A1,000 and Zip Money offering credit more than $A1,000. Zip Pay is the company’s most popular and profitable service to date.
Zip Pay promotes convenience, wherein you can access credit at the point of purchase with minimum hassle and little delay. In addition to this, it is “ïnterest-free”, it charges only a flat fee of $6 a month regardless of how much is owed and an additional $5 if the minimum monthly payment of $40 is not made on time.
This fact is enough to encourage shoppers to take advantage of Zip Pay service. Easy access on credit card is one of the reasons why individuals accumulate more debt.
It can be seen on Zip’s 2018 annual report that almost a quarter of Zip customers are under the age of 24, and more than 60% are under 36. These customers used Zip Pay to pay for fashion items, clothes and restaurant meals --- non-essential items, rather than to pay energy bills or buy medicine.
To justify this, the recent research done by the Australian Securities and Investments Commission showed that the majority of “buy now pay later” users admit that easy credit has led them to spend more money, with one in six reporting some negative impact as a result.
Zip’s services is ideal for customers who are confident that they can manage their finances. Without discipline and proper financial budgeting, using ‘buy now, pay later’ service will definitely lead to debt and financial hardships.
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