Buy now pay later – What are the options for NZ retailers?

Why wait when you can have it now? With the arrival of new providers in New Zealand, you don’t even need to have the money in your pocket to buy what you want.

Since the launch of AfterPay in Australia in 2015, buy now, pay later has become a popular way of shopping, especially among millennials. It removes the need to wait. Shoppers can receive their goods straight away and then arrange to pay for them in weekly installments over a 4 – 6 week period. Retailers are not out of pocket, as they receive the funds from the provider when the purchase is made.

Buy now, pay later has been quite a popular shopping method in Australia over the last two years, and it has recently gained a lot of traction in New Zealand. This payment method has potential to increase conversion rates for online stores. Previously shoppers would abandon their cart if they did not have the funds available, but now they have an option to still buy. Because the option is still so new in New Zealand, it is yet to be seen if this prediction is true or not.

There are 4 major suppliers in New Zealand that can provider this service to retailers and shoppers.

Let’s have a look at them…

Afterpay

Afterpay explain it all with their tag line: “Shop Now. Take Now. Pay it in 4.”

Afterpay can be integrated with online stores through API or a plugin. After integration, it will appear as a payment option at checkout when completing an online order. First time buyers will need to go through a quick registration process with their name and debit card before they are able to buy.

Shoppers then agree to four equal payment installments, spaced 2 weeks apart. Approval is almost instant. First time buyers will need to pay 25% upfront and existing customers with a proven record will not have to pay any amount upfront.

There are no interest charges or applicable setup fees for shoppers. The only time a fee is charged is if a repayment is missed. Then shoppers are charged a $10 penalty and a further $7 if the missed payment is not corrected within a week. Afterpay accepts Visa or Mastercard credit and debit cards.

As a merchant, Afterpay charges a percentage fee per transaction, plus a transaction fee. In Australia, these fees are currently 6.5% per transaction + 30 cents (excl GST). We suspect the fees to be similar here in New Zealand when they launch.

Availability: Launching mid September 2017

Key highlights:

TradeMe: Afterpay has a partnership with TradeMe. It allows sellers to offer installment payments to buyers in general marketplace sales. Large ticket items like vehicles, or businesses for sale are excluded. There are also some restrictions in place across other sales categories, but in general it is a great option for sellers.

Proven: Afterpay is the most successful provider in Australia and is now coming to NZ. It has a proven track record of success for our nearest international neighbours.

Shopping Directory: Afterpay have a shopping directory on their website, listing their shopping partners. This online shop directory gets a huge amount of traffic each month so could be great business exposure.

Laybuy

Laybuy is a New Zealand company that works on the same principle as Afterpay, integrating into online stores as a payment option. Shoppers can choose this option at checkout, where they will receive their items immediately and agree to 6 weekly installment repayments. All customers pay the first of the 6 installments upfront, with 5 additional weekly payments to follow.

First time buyers will undergo a credit check when they complete their registration. Laybuy Limits go as high as $1200 and have a built-in feature that allows your customers to shop above their limit providing they can manage the “excess” on Day One. For example, someone with a $600 Laybuy limit can spend $1200 (or more) in your store via Laybuy so long as they pay the $600 “excess” (in this example) on Day One and then 5 weekly payments of $120 for the balance.

Availability: Available now

Key highlights:

In Store: Laybuy is available in around 200 physical stores across New Zealand including Hallenstein Glassons, Storm, Augustine, Stirling Sports, North Beach, Wallace Cotton, Repertoire, Parnell Baby Boutique.

Popular: Possibly the most popular solution in NZ at the time of writing this article.

Shopping Directory: Laybuy also has an online shopping directory for retailers using their services. Some small business have reported an increase in traffic to their website from this directory.

PartPay

PartPay is another New Zealand provider offering installment payments for immediate release of goods. They follow the same process as the other providers where the option can be integrated into the checkout process for online shopping.

They do the same credit checking for first time buyers and all shoppers pay for 25% of their purchase up front. The remaining payments are made over 6 weeks in fortnightly intervals. They have a maximum purchase amount of $1250.

Again they do not charge interest on purchases, but do have an $8 late payment fee if a repayment is missed. They also charge a further $8 per week that the payment is outstanding for.

Their merchant fees are percentage of the transaction value.

Availability: Available now

Key highlights:

Installation: PartPay offer free installation for merchants using Magento, making it cost and risk free for retailers.

No exclusivity or tie in – Partpay do not hold retailers to an exclusive contract. If it doesn’t work for them then they should be entitled to turn it off easily.

OxiPay

OxiPay are owned by the same company that offer QCard finance which means they are a trusted and established brand.

Just like all of the other providers, the payment option is integrated into the checkout process. Their installments are divided into 4 payments, the first due at time of purchase and then the other 3 are spread fortnightly across 6 weeks.

Their late fees are comparable at $10 per missed installment. Though, if the payment remains outstanding it is referred to their collections team and a $30 fee is payable. They offer a maximum purchase limit of $1000 and that can be spread across a maximum of 5 purchases.

Availability: Available now

Key highlights:

Trusted: OxiPay is backed by Flexi group (QCard), so is an easy add on for retailers who are already accepting QCard

Fees: Of all the available solutions they offer the best rate

Which One Is The Best?

At this early stage it is too hard to say if one provider is any better than the other. They are all vying in a market that is saturated with sky rocketing house prices and large student loans, but people (particularly younger people) still have a desire to spend. This buy now, pay later process allows people to spend without all of the money in their pocket at the time of purchase.

Having worked with all the providers above we still find it’s a bit early at this stage to decide which one is better than the others, as they all have their unique highlights. Our usual rule is that you should choose the most popular solution. But as these providers have only been on a market a short time, there is not a clear popular choice yet.

With time, one solution will emerge as the most popular choice and that’s when you should go with that solution. However at this stage, just chose the provider you are comfortable with and test whether buy now, pay later works in your business.

One thing that might help you make a decision is the repayment options. Which of the repayment terms would most suit your ideal customer? Otherwise you could draw a name out of a hat, or throw darts at the wall, whatever works for you!