The country’s largest buy now company (BNPL) wants to add something more akin to a short-term loan to its offering.
Money by Afterpay, the BNPL’s personal finance app due out in November, is offering Spot customers $ 200 per week as part of the latest product launch.
The “retro” function enables customers to subsequently convert an existing direct purchase into a buy-it-now transaction and pay later, regardless of whether the merchant accepts Afterpay or not.
In practice, this means Afterpay effectively returns customers up to $ 200 a week in cash, which they then repay in four installments.
As with his other BNPL purchases, the feature is free of charge if repayments are made on time, with the first not being due for two weeks. Late fees will continue to apply and the feature will continue to count towards the customer’s spending limit.
It is also subject to some additional requirements. On the one hand, authorized transactions must be made with the money debit card and converted retrospectively into a BNPL debt within 72 hours.
Afterpay – which has been criticized for encouraging young people to get into debt – touts money as a “financial management tool” and says that retro was one of the most requested features by customers.
“As we continue to build the money experience, we are creating a platform for customers to change the way they think about their money,” said Lee Hatton, executive vice president of New Platforms.
“Customers can forego salary advance apps or overdrafts in favor of a single, fee-free solution.”
Certainly there is no shortage of such companies trying to reshape payday loans and salary advances for a digital generation and amid a BNPL boom.
While Afterpay’s offering doesn’t hit customers with the same fees, sometimes verging on extortion, it’s also not subject to the same credit restrictions that protect users of more traditional credit products. Even though Money piggybacks Westpac’s banking infrastructure.
Instead, it has found itself as a pioneer in the no man’s land between traditional credit and predatory lending and has been given the necessary leeway to do so.
Money by Afterpay seems to be bringing this first mover advantage home and penetrating even further into uncharted territory.
Since it competes against large tech companies, large banks, and a host of smaller direct competitors, it might be grateful for a little clearance.