This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: The way a product is labeled can change how consumers think about it. "No added sugar" or "99% fat-free" can make food sound healthier than it really is.
The same might apply to buy now, pay later schemes. Marketed as a convenient way to pay for purchases over time, they are fundamentally still a form of debt. Products such as Afterpay, Klarna and Zip (which recently exited the New Zealand market) offer consumers access to items they may not be able to immediately afford.
Speedy approval and an easy checkout add to the appeal but can also encourage overspending, while missed payments can bring late fees and mounting debt. Part of the product's attraction, particularly among younger consumers wary of credit cards, has been the idea that it is different from conventional borrowing. Our new research set out to investigate this further: If it feels more like a normal payment, does that affect how people use buy now, pay later?
And might better financial literacy protect them? Buy now, pay later emerged in the early 2010s and quickly became commonplace in New Zealand. It can now be used for everything from fast fashion and takeout food to dental treatment.
Typically, consumers borrow relatively small amounts and repay them over four fortnightly installments, without interest or establishment fees. Providers charge vendors a small percentage (2% to 8%) on each sale but also earn substantial revenue from late fees charged to consumers. Approval has traditionally been fast and easy, making these services accessible to people who might struggle to obtain conventional credit.
For years, the law treated this form of borrowing differently, too. Because providers generally charged no interest or credit fees, their products fell outside New Zealand's main consumer credit law. That changed in September 2024 when buy now, pay later was brought under the Credit Contracts and Consumer Finance Act.
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