Afterpay is a world leader in the burgeoning buy now, pay later industry. It is struggling against new initiatives, having partnered with Uber to have its payment service adopted Australia-wide. This partnership continues Afterpay’s efforts to improve accessibility to people for regular, everyday purchases, a marked departure from Afterpay’s past emphasis on discretionary spending. The agreement has alarmed financial experts who warn that it could exacerbate risks tied to rising consumer debt.
Afterpay allows users to split purchases into installments, but it imposes fees of up to 25 percent of the purchase price or $68 for missed payments. As a result, Afterpay is considered a low-cost credit provider under the Credit Act. This means it has to comply with current credit legislation and acquire an Australian credit license. Co-founder Nick Molnar expressed optimism about this development, stating that it grants “legitimacy” to the service and envisions Afterpay being accepted wherever credit cards are utilized.
The partnership with Uber, a frequent and familiar app used by many of us, represents this mounting demand for convenient payment options and cashless mobility. An Afterpay spokesperson stated, “This partnership with Uber — one of the most widely used apps in everyday life — reflects growing demand for safe, simple, and affordable payment alternatives.”
Even with this progress made, big questions remain about what it will mean if these kinds of financial services—available populations—increasingly become available. Vicki Staff, coordinator for the National Debt Helpline, expressed her concerns over the normalization of services such as Afterpay. She stressed that users would likely open several accounts for their small purchases. This can soon snowball into a frightening cycle of debt.
“We worry that a lot of people are using buy now, pay later, setting up multiple accounts, and then using it to buy lots of small discretionary type services or products,” Staff said.
Rose Bruce-Smith, senior policy officer at the Consumer Action Law Centre, supported the move and said it was time to halt Afterpay’s expansionary plans. She noted that while consumers might feel optimistic about their repayment abilities, essential services like Uber could lead individuals deeper into debt.
“We know that people are optimistic about how much they’ll be able to repay in the future. Uber is something that is almost an essential, and we regularly speak to people who can’t pay for essentials and get further and further into debt with these services,” Bruce-Smith commented.
Expanding on these dangers, Bruce-Smith highlighted the contrast between credit cards and companies like Afterpay. She stated, “There are checks and balances with a credit card, which is very different from this sort of tech-first approach to integrating your business into every payment system we have.”
