The country’s largest buy now (BNPL) company is looking to expand its offering into something that more closely resembles a short-term loan.
Money by Afterpay, the BNPL’s personal finance app due to be launched around November, will offer to ‘spot’ customers $200 per week as part of its latest product reveal.
Called ‘Retro’, the feature will enable customers to retrospectively turn an existing outright purchase into a buy now, pay later transaction, regardless of whether the merchant does or doesn’t accept Afterpay.
In practice, it means Afterpay will effectively hand back customers up to $200 at a time in cash, which they will then repay in four instalments.
Just as with its other BNPL purchases, the feature is fee-free if repayments are made on time with the first not due for two weeks. Late fees are still levied, and the feature still counts towards a customer’s spending limit.
It is also subject to some additional requirements. For one, eligible transactions have to be made on the Money debit card and must be retrospectively converted to a BNPL debt within 72 hours.
Afterpay – which has been criticised for encouraging young people to go into debt – is pitching Money as a ‘financial management’ tool and says Retro was one of its most requested feature among customers.
“As we continue building out the Money experience, we’re creating a platform for customers to change the way they think about their money,” Lee Hatton, executive vice president of new platforms, said.
“Customers can forgo salary advance apps or overdraft facilities in favour of a single solution that doesn’t charge fees.”
Certainly, there is no shortage of such businesses that are trying to reframe payday lending and salary advances for a digital generation, and amid a BNPL boom.
Yet while Afterpay’s offering doesn’t hit customers with the same kind of fees, which sometimes border on the extortionate, it also isn’t subject to the same kind of credit restrictions that protect users of more traditional credit products. That’s despite Money piggybacking on Westpac’s banking infrastructure.
Instead it has found itself largely pioneering the no man’s land in-between traditional credit and predatory lending, and has been given the necessary leeway to do it.
Money by Afterpay looks set to drive home that first mover advantage and plunge even further into uncharted territory.
As it knocks up against big tech companies, major banks, and a host of smaller direct competitors, it might be grateful for a little open space.