Reflections on Buy Now, Pay Later Services and Financial Wellbeing

Like many Australians, I’ve watched buy now, pay later (BNPL) services become a familiar part of everyday spending. My own journey began with opening an Afterpay account, drawn in by the flexibility it offered for managing my purchases. Initially, I used BNPL as a way to spread the cost of occasional extras, helping me avoid large upfront payments. I set clear personal rules: I limit how many purchases I make at once, use BNPL sparingly, and always keep an eye on my monthly expenses. This cautious approach has helped me stay out of unnecessary debt and maintain control over my finances.

Over time, though, my relationship with BNPL has evolved. As the cost of living keeps rising and new service offerings become available, I find myself considering BNPL for more than just the occasional treat—sometimes even for essentials. This shift from occasional extras to everyday essentials marks a significant change in how Australians use BNPL services. Recently, I received an email from Afterpay announcing that I could now use it to pay for petrol, which made me pause.

While the convenience is tempting, I’m hesitant to rely on BNPL for daily costs like fuel. While people may not need a new wardrobe every season, they do need petrol for their cars every week or so. My personal hesitation reflects a broader trend: more Australians are turning to these services not only for extras, but to cover necessities as the cost of living rises.

The expansion of BNPL into essentials like fuel, groceries, and utilities has significant economic and social implications. If supermarkets and utility providers begin widely offering BNPL, small businesses might struggle to keep up. Large retailers have the resources to absorb the costs and offer attractive payment plans, while smaller shops could be left behind, unable to compete with the flexibility and marketing power of big players.

For example, if Coles and Woolworths roll out BNPL at scale, local grocers and independent supermarkets may lose customers who prefer the convenience of spreading payments over time, potentially leading to further market consolidation and fewer choices for consumers. Many people are constantly complaining that their favourite foods are increasing in price on the shelves, adding to this pressure.

These changes are unfolding against a backdrop of mounting economic pressures. According to recent studies, fuel prices have jumped nearly 15% over the past year, making it harder for families to afford transport. The Australian Automobile Association reports that the average annual transport costs for households now exceed $23,000—a figure that’s putting serious strain on many family budgets.

With the prices of groceries, utilities, and rent also climbing, it’s no surprise that over 5 million Australians used a BNPL service in 2023, with active accounts increasing by more than 20% in just one year. These statistics highlight how BNPL has shifted from a niche payment option to a lifeline for many households. Personally, I’ve noticed that during expensive periods like Christmas or when unexpected bills hit, I’m more likely to use BNPL to help bridge gaps in my budget—something I rarely considered when I first signed up.

Compounding these financial challenges is the reality that for most Australians, cars are not a luxury but a necessity. Public transport in large cities and towns is often patchy, and in regional or rural areas it can be non-existent. Many neighbourhoods aren’t designed for walking, making alternatives to driving impractical. Without major investment in public transport and improvements to walkability, reliance on private vehicles—and the associated costs—will remain a fact of life for millions.

All these trends point to deeper issues in our society and economy. Everyday expenses are rising faster than wages, forcing people to find new ways to make ends meet. BNPL’s growth as a tool for managing essential costs is both a symptom and a signal of broader financial strain. While I continue to use Afterpay judiciously, mainly for extra purchases or during expensive times, I recognise that for many, BNPL is becoming an essential resource rather than a convenience. The widening dependence on these services speaks volumes about the challenges facing Australian families, small businesses, and communities as the cost of living continues to climb.