Major changes coming to Afterpay - see why an expert welcomes the app's updated rules as 'sensible'
New changes will help shoppers budget Can choose payment day to coincide with pay-day READ MORE: The sad reality of the cost of living crisis in Australia
Major changes have been made to Australia's most popular Buy Now Pay Later (BNPL) service, Afterpay, with one expert welcoming the tweaks as 'sensible'.
Under Afterpay's terms of service, all customers can now choose which day of the week their instalment is debited out of their account.
Currently, the day of purchase automatically becomes the day all future fortnightly payments are based upon.
In another change, select customers will be given the option to delay their first payment by up to two weeks on eligible orders.
In an email to all customers, Afterpay said that 'more customers' will now be able to use the benefit.
Two changes are now available on Afterpay - choosing what day your payments will land on and the option to defer the first payment for up to two weeks (for select customers)
Australian shoppers have embraced Buy Now Pay Later (BNPL) schemes, but as of March this year, 20 per cent of consumers have paid a late fee, according to Finder (stock image of shoppers)
'We can decide whether to grant you access,' the service said.
'When deciding this, we take into account a range of factors, including how long you’ve been with Afterpay and your payment history.
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'We may remove access if you’ve failed to make a payment on time or where we otherwise reasonably need to do so.'
Afterpay said the change allowing customers to choose what day their payments are due was to aid consumers in managing their 'finances more efficiently'.
Even if customers do not choose a preferred payment day, a default one will be given to the shopper - but they can change this.
University of Sydney Business School Associate Professor Andrew Grant told 7 News he believes this change is a 'sensible option' - as long as customers choose the day on or soon after they get paid.
'A large reason for missed payments — which incur dishonour fees as well as late fees — is due to mismatched pay cycles,' he said.
Mr Grant said it will 'reduce the risk' of Afterpay trying to collect money via direct debit when people are low on cash before their pay day, adding it should help with shoppers' budgeting.
An expert said the change to Afterpay - where consumers can choose which day they would like their payment to be deducted on - will help Aussies budget
But Mr Grant noted that the option to delay the first payment for up to two weeks will likely require customers to undergo a credit check before qualifying.
'In the case of ‘low risk’ consumers — either identified through their credit history, or a sequence of good payment history with Afterpay — providing them an option to shift the first payment by up to two weeks would be similar to other forms of credit,' Mr Grant said.
The associate professor said there could potentially be a higher risk of 'larger' bad debts - such as customers now defaulting 100 per cent of the payments instead of 75 per cent.
Aussies are set to rack up A$25.8billion in 2024 in payments on BNPL services
But Mr Grant said this bad debt could be off-set by gaining more customers and the company doing careful credit checks.
According to Finder, two in five Australians (40 per cent) had used a BNPL service in the period from October 2023 to March 2024.
'Gen Z and millennials are most likely to use BNPL services, with 52 per cent and 59 per cent using BNPL respectively (March 2024 data),' it said.
As of March this year, a whopping 20 per cent of BNPL users have paid a late fee - up from just five per cent in 2020.
Australians have embraced BNPL services - and now rack up billions of dollars in transactions per year.
Payments are expected to reach A$25.8 billion in 2024, reported Yahoo.