Is Afterpay going to drive its global growth from debts by millennial?

What’s better than tap and go nowadays? Afterpay, where you can shop now, enjoy now, pay later.

Afterpay is an Australian financial technology company that allows its consumers to pay for their purchases over four simple instalments. It’s pretty much an online credit card for consumers where if you make repayments on time, you’ll only ever pay the price of the item you’ve purchased.  Afterpay has soared in popularity with 2.2 million people making transaction on the platform as of July 2018.

However, new research from Mozo has discovered some worrying figures surrounding the spending behaviour of Afterpay users. 30% of Mozo survey respondents has admitted to have missed at least one Afterpay payment whilst 65% said the ability to make smaller payments has influenced them to make purchases they wouldn’t mormally make. This evidently shows the impulse buying behaviour that Afterpay causes, which may ultimately end up in overspending, leading to debts. In August 2018, the company reported a 365 percent surge in the money it earns from late fees, fees that are charged when customers miss payment, amounting to $28.4 million! Whilst the company has emphasized the “vast majority” of its revenue was derived from other retailers and merchants, the late fee charges still amounts for 24 per cent of its income!

Personally, I think I would be a victim of late charges which is why I refuse to get an Afterpay account. But what are your thoughts?