Afterpay Raking $28M a Year from Late Fees

dcep on 30/08/2018 - 14:42
Last edited 30/08/2018 - 14:45

"Afterpay is raking in millions at the expense of debt-ridden and vulnerable Australians.

As many as one-quarter of Afterpay users are suffering financial stress, with one in three admitting to missing at least one payment.

The National Debt Helpline is receiving an increase in reports from vulnerable consumers using the app.

Afterpay’s annual report revealed that the company’s late-fee earnings rose by a massive 365 per cent, to $28.4 million, in one year alone.

About one-quarter of its income now comes directly from late fees, with the remainder from retail sales commissions."

https://thenewdaily.com.au/money/consumer/2018/08/24/afterpa…

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Comments

  • HighAndDry on 30/08/2018 - 14:50
    +302

    Afterpay is raking in millions at the expense of debt-ridden and vulnerable Australians.

    Did I or did I not just say I hate this kind of language? These are adults. You know what the solution is? Don't buy s*** you can't afford, and don't be late in repaying your debts. It's not rocket surgery.

    This is even worse than complaints about payday lenders; Afterpay is almost 100% for non-essentials.

    • cvas on 30/08/2018 - 15:10

      Is that a 12th Man reference I spot?

      • HighAndDry on 30/08/2018 - 15:18
        +38

        Unfortunately you seem to have mistaken me for a far more cultured individual…

        • bargaineer on 04/09/2018 - 22:33
          +2

          I half agree with you. This is how afterpay makes a lot of its money. It’s betting a bunch of people don’t pay on time, and that’s fine.

          Payday lenders on the other hand are the scum of the earth. They prey on people who are truely vulnerable knowing full well they’re likely going to have trouble paying the money back. Their aim is to get people into a payday loan debt cycle.

    • [Deactivated] on 30/08/2018 - 16:39
      +11

      I once did an appendectomy on a rocket whilst sedated. The rocket was fully conscious though.

      • Save Medicare on 31/08/2018 - 11:52
        +1

        You need general anaesthetic, not sedation for appendicectomies to relax the abdominal wall of the rocket

        • [Deactivated] on 31/08/2018 - 14:47
          +3

          Of course if I was put under, the rocket would be a lot more relaxed but who is going to perform the surgery?

        • Worf on 01/09/2018 - 19:41
          +1

          User name checks out

    • try2bhelpful on 30/08/2018 - 22:04
      +22

      Personally I loathe payday lenders with a passion. They are (barely) legal loan sharks.

      For people who are considering using these services I provide the following link

      https://www.moneysmart.gov.au/borrowing-and-credit/payday-lo…

      Hopefully, this will stop you falling into their hands or at least give you pause for thought.

      • HighAndDry on 31/08/2018 - 08:22
        +9

        I don't understand the objection. People who don't need payday lenders but use them anyway are stupid - don't borrow this kind of money to buy stuff you don't need. I have no sympathy.

        For people who do need payday lenders, they'd literally starve (or worse) if payday lenders didn't exist, because who else is going to lend them money? I'd be sympathetic but my sympathy won't pay their bills.

        • try2bhelpful on 01/09/2018 - 13:49
          +8

          There are other alternatives, as I indicated in my link - the payday lenders are the absolute last place anyone should look for a loan. If you look at the ads for payday lenders they are trying to normalise really poor financial descision - "want to shout your friends a round of drinks, use a payday loan" - WTF. We aren't all financially canny; personally I prefer a world were people are encouraged/educated to make good decisions rather than bad ones.

        • Jackson on 05/09/2018 - 18:23

          Maybe this will explain: http://www.abc.net.au/4corners/game-of-loans/6352956

        • HighAndDry on 05/09/2018 - 18:38

          @Jackson: save me the emotive rhetoric.

          A hard working mother of three, she took a short-term loan from a payday lender to buy her daughter's school computer. Borrowing the money was easy, too easy

          Yes, it was so easy it apparently somehow forced her to take out loans.

        • HighAndDry on 05/09/2018 - 18:39

          @try2bhelpful: Asking yourself:

          "Can I afford this" is not financially canny. It's basic financial responsibility.

          Financially canny would be using these services to extract more money from your term deposit.

        • try2bhelpful on 07/09/2018 - 20:36

          @HighAndDry: being canny is not falling for their “this is a good way to buy something” advertising. As far as I’m concerned the rates should be the first thing they see in large letters, not hidden in the T&Cs. As I’ve indicated elsewhere even l’ve fallen for not getting the best rate on loans in the past and I consider myself pretty cluey. Experience is a great teacher if you don’t drown in the meantime. Also situations change, you may have been able to handle the debt when you start but a large expense wipes out your ability to now. I won’t condemn people without taking into account all the circumstances; yes some people are stupid but some are just unlucky. The term deposits at the moment are crap; you need to find a cannier place to invest money. Personally I buy stuff on credit card and payoff each month, pocket the points towards business class airfares.

    • Allan Thomas on 31/08/2018 - 11:26

      You're right. Afterpay is only used by people with maxed out credit cards or no credit card because they've defaulted, plus no ready cash. Inability to stop spending money that you don't have is similar to a gambling addiction. Women are particularly vulnerable because they're fashion victims and get an endorphin rush from the new dress,shoes, bag etc. Afterpay deliberately targets such weak minded, weak willed people, it's sickening.
      The quality of their loan book must be appalling. I won't be buying any of their shareson principle. I hope they go broke and take their greedy shareholders with them

      • HighAndDry on 31/08/2018 - 11:28
        -8

        Afterpay deliberately targets such weak minded, weak willed people, it's sickening.

        I personally think that it's rather the being so weak minded and weak willed that's sickening.

        The quality of their loan book must be appalling.

        I very much doubt that - seeing as they have arrangements with retailers, I don't think they're taking on 100% of the upfront cost and risk.

        • singingwolf on 31/08/2018 - 14:40
          +4

          The are actually. They pay the retailer in full and take the full risk.

        • HighAndDry on 31/08/2018 - 14:42

          @singingwolf: Ah. That explains the high rate of commission. Hmm… that's a rather risky business model, I wonder who their underwriter is (I hope they have one…).

        • singingwolf on 31/08/2018 - 14:43
          +1

          @HighAndDry: Was NAB but I think they are moving to Citi

        • HighAndDry on 31/08/2018 - 14:45

          @singingwolf: Okay, then I guess the risk just seems worse than it is. I'd trust a big bank to have the resources to property vet this…….

        • Chewiebacca on 03/09/2018 - 21:46
          +1

          @singingwolf:

          I know in the case of Zipmoney there is a 2-5% charge which is on the retailer to bear.

      • filfa on 31/08/2018 - 11:35
        +29

        Not really, I have a well paying job, no credit card because I don't want one and still use Afterpay.

        I have cash available in my bank, if I have $500 spending money left for the fortnight and want something that's $400 sure I could buy it outright, or I could buy it with Afterpay, pay $0 interest and have no cash flow issues if something arrises without dipping into my savings.

        I personally think Afterpay is great, if you're living within your means.

        • iDroid on 31/08/2018 - 13:14
          -1

          — deleted —

        • ATangk on 31/08/2018 - 17:24
          +6

          That last phrase of the last sentence is what gets most people.

          Credit cards are great - until you dont pay it off fully.

        • Miss B on 31/08/2018 - 23:32

          I have used it a few times for Items around $500. I've not had an issue making the payments so I've never had to pay any late fees. Anecdotally, I think people run into trouble getting multiple Afterpay loans and not keeping track of how much they're going to need to pay, although I'm sure there are other reasons as well. I only have one loan at a time and don't use it particularly often.

      • Jimmycfc on 31/08/2018 - 11:49
        +1

        Not really, i used it to buy some expensive PC parts that i couldn't justify spending the money outright on although i have it.

        • iDroid on 31/08/2018 - 13:15

          You couldn't justify the cost but when using Afterpay it's justified?

          Hmmm.

        • Jimmycfc on 31/08/2018 - 13:22
          +2

          @iDroid: Yes i dont want to be out of pocket $1000 immediately for a luxury such as a gaming PC, i'd rather pay it off within 6 months and pay $30 extra

        • JIMB0 on 31/08/2018 - 19:05
          -8

          @Jimmycfc: So if someone wanted to cut your arm off you'd be ok with it as long as they did it bit by bit over 6 months?

        • Gelato on 31/08/2018 - 20:49
          +1

          @Jimmycfc: Personally I'd only fork out $30, if what my principal, i.e. $1000 in you case, can lead me to more than $30 in 6 months time…

          Or if you needed $1000 for something else, then also makes sense to pay $30 for the service

          Though if that $1000 is just sitting at your bank account then why not just buy it outright to avoid $30

        • callum9999 on 31/08/2018 - 23:03
          +2

          @Gelato: I know so many people who don't think rationally about things like this - they just like the look of it sitting in their bank account as long as possible.

          Someone I know even got a payday loan because they'd rather pay out loads in interest than see their bank balance fall…

        • Miss B on 31/08/2018 - 23:35
          +3

          @JIMB0:
          Do you realise that what you're saying has no relevance to the current conversation?

        • iDroid on 01/09/2018 - 10:05

          @Miss B: It's a absurd exaggeration used to express a point.

        • Miss B on 01/09/2018 - 18:07
          +5

          @iDroid:
          It's irrelevant and therefore it doesn't express a point. Arguing that because someone would prefer to spread a $1000 purchase over 6 months they must be happy to have their arm cut off over 6 months is not an exaggeration, it's just stupid. It would be like me saying, well if they're fine with spending $1000 immediately, they must be fine with having their arm cut off immediately.

        • iDroid on 01/09/2018 - 21:24
          -5

          @Miss B:

          It would be like me saying, well if they're fine with spending $1000 immediately, they must be fine with having their arm cut off immediately.

          Well, no it isn't.

          You're mixing the two concepts together. Their post didn't.

        • Miss B on 01/09/2018 - 22:59
          +3

          @iDroid:
          It did by responding to a comment about one with the other.

        • iDroid on 03/09/2018 - 10:25
          -2

          @Miss B: Yes, a bit like cats and dogs are irrelevant with regards to the amount of rain. But a simile is a simile for a reason. It's the same principle.

          But regardless, the point remains. If something is unjustified, changing the period it happens over is unlikely to change the level of justification. This is the flawed logic that gets people in trouble with payday lenders etc. They assume their position will be better in the future when this is almost never true.

          Losing an arm over time can hardly be justified any more than losing it immediately. Likewise, spending $x on something today vs spending $x on the same thing over 6 months is not increasing the justification (there may be other reasons though), it's just doing the same thing over longer period. You're still spending $x on y. It's the same.

        • Jimmycfc on 04/09/2018 - 11:14

          @iDroid: But it's not the same due to the time variable, hence my original statement.

        • R4 on 05/09/2018 - 18:11

          @callum9999: That's stupid I agree but if you scale that up a bit, many companies borrow money even when they have cash and other assets available. Cashflow is vital to them

    • outlander on 31/08/2018 - 11:51
      +21

      Because people are stupid. They don't have the ability to accurately forecast the next month of their life, just like you or I don't have the ability to accurately forecast the next 20 years of our lives. They will agree to onerous terms, then struggle to fulfill them. Which is fine, if you consider stupid people to be useless byproduct of society (I don't but I understand if you do). But those people have kids. Financial stress makes for a bad childhood home. Which once again, maybe you don't care about, maybe you consider the kids of stupid people to be as worthless as their stupid parents, but once the issue becomes generational you start impacting the larger society. And its the larger society that ends up picking up the tab.

      And for what? Nothing great is coming from this. The pain is not being inflicted to gain valuable knowledge or develop powerful technologies.

      All its doing is just making some sociopath richer.

      • HighAndDry on 31/08/2018 - 11:57
        -8

        Because people are stupid.

        And it's nobody else's fault but theirs that they're stupid. Done. I still have no sympathy.

        But those people have kids.

        Those stupid people right? How much better do you think the kids of stupid people will turn out anyway, even without financial stress? Nothing stops stupid people from splashing more money than they can afford on TVs, or cars, or chocolate, or feeding their kids nothing but junk food either.

        You seem to be arguing in support of either sterilizing stupid people, or having the government take and raise those kids. I mean, if you asked me - the only problem is a practical/logistical one, not a moral or ethical one, but I don't know that you would agree with the logical conclusion of your arguments here.

        And for what? Nothing great is coming from this.

        By all accounts it seems to allow three quarters of the users of Afterpay, like pensioners, to afford the upfront cost of things they'd otherwise not be able to afford, even if they can afford installment payments.

        • outlander on 31/08/2018 - 12:21
          +1

          And you? Are you ready to be judged by the sins of your father?

        • HighAndDry on 31/08/2018 - 12:24
          +1

          @outlander: That's not what's happening here - I thought we were having an honest discussion. This is blaming things on your upbringing instead of taking responsibility for them.

          Do I blame my upbringing for my personal failings? No. I'm my own person. I'm responsible for my actions and decisions.

        • outlander on 31/08/2018 - 14:51
          +2

          @HighAndDry:

          I'm not the one who thinks stupidity is a choice, or that it should be punished by indentured servitude and sterilization.

          I believe in respecting people's freedom to choose, but schemes like this are predatory. They set people up to fail
          (Still fine with that! But there needs to be limits to what they can lose. Just like in texas hold 'em)

        • HighAndDry on 31/08/2018 - 14:59
          +1

          @outlander:

          I'm not the one who thinks stupidity is a choice

          Stupidity isn't a choice. Acting stupidly and irresponsibly is.

          Being stupid doesn't put you in debt. Choosing to buy stuff on credit you can't afford does.

          See the difference?

          but schemes like this are predatory.

          AGAIN FOH with this kind of language. Are Afterpay contracts chasing down people on the street and forcing them to buy stuff they don't need using Afterpay? No? Then it's not predatory.

        • M1ndFu7 on 31/08/2018 - 15:32
          +3

          @HighAndDry:

          If stupidity isn't a choice, how is acting stupidly a choice?

          Is buying stuff on credit you can't afford a stupid decision? if so, then being stupid does put you in debt.

          There is no doubt bad decision put people in debt. But like many have mentioned, this is a predatory behavior on Afterpay part, and should be regulated.

          Imagine hard drugs are for sale in shops. Is it not the drug consumer's fault to be addicted? Absolutely. But as a society, we need to have regulation in place to prevent these sort of predatory businesses.

        • HighAndDry on 31/08/2018 - 15:33

          @M1ndFu7:

          Is buying stuff on credit you can't afford a stupid decision? if so, then being stupid does put you in debt.

          So is mugging someone, but we don't let them go free because "Oh stupidity isn't a choice."

          Though I'm beginning to warm up to your line of thought.

        • outlander on 31/08/2018 - 15:37
          +1

          @HighAndDry:

          What makes you they're acting stupidly? Does a bird act stupidly when it sits on a power line? Or does it just not have the capacity to understand the risk.
          What about a fish that swims into a net? Is that a stupid fish? Or is it just a fish, possessing a fish brain with fish limitations.

          AGAIN FOH with this kind of language

          You seem to have an issue with the language here.

          I used to have an issue with it too. At the time, the way it seemed was that these kinds of people would, having done nothing to deserve it, demand a share of everything. They would cite their needs, how they were human and had a right to dignity and respect, how it was the fair thing to do etc etc. Making themselves look like the Oliver Twist, just begging for a chance. Then in the next breath they would try and wiggle out of responsibilities.. running up huge bills and then crying poor. Making themselves into the victim. Pointing the finger at everyone but themselves. Never accepting responsibility for their actions, always leaving someone else to clean up the mess.

          I have a pretty strong disgust for hypocrisy, so at the time it rubbed me the wrong way. But, in time I came to see the bigger picture. Now it seems minor in comparison.

        • callum9999 on 31/08/2018 - 23:09
          +1

          @outlander: These people are rarely actually stupid, they're greedy. And yes, that is their fault and yes, they can be blamed for it.

          And if we're going along with your incredibly patronising spiel about them literally being so mind numbingly moronic that they're incapable of knowing that debt has to be repaid, they not only can't be trusted with children they probably shouldn't be allowed to look after themselves either.

        • peterpeterpumpkin on 01/09/2018 - 09:37
          +1

          "And it's nobody else's fault but theirs that they're stupid."

          That's very insensitive. I assume no one in your family was mentally handicapped or perhaps you stayed away from those with special needs. Or even bullied them?

          Does your sense of entitlement come from winning a genetic lottery? Perhaps you should try volunteering with Windgap to build some empathy.

        • HighAndDry on 01/09/2018 - 10:11

          @peterpeterpumpkin:

          Insensitive maybe but am I wrong?

          Plus, we're talking about adults who're judged legally mentally competent to administer their own finances. Save your fake angst.

        • outlander on 01/09/2018 - 18:22
          +1

          @callum9999:

          What I've come to realize is, that everybody is a moron to someone higher up on the evolutionary ladder. If you're going to shit and take advantage of the people below you, you shouldn't be surprised when the same thing happens to you.

          Sure, I'll cop to being patronizing. I would rather patronize someone and bring them to shore, than respect their ability to swim and watch them drown. You have to use a light touch though, which is why I advocate for restricting costs to a reasonable level and not outright banning this type of thing.

          But just because I believe that doesn't mean I believe you have free license to make it worse. A house can be on fire, but that doesn't mean its fine for you to go throwing gasoline on it. That type of logic is bs

        • AddNinja on 01/09/2018 - 19:25
          +1

          Hang on - how can you blame someone for being stupid? Many of them are born that way, or perhaps become that way through environmental factors beyond their control. Do you blame short people for people short?

      • Thaal Sinestro on 03/09/2018 - 01:34

        I think people are conflating stupidity (which I would define as low IQ) with poor impulse control, inability to delay gratifcation, and an inability to think beyond the present (lack of foresight). That said, all these failings are a defining feature of the Labour Party voting demographic, and explain why they will never get ahead in life.

        All you need to win these people over at election time is a promise to borrow or print lots of money and hand it out. These short sighted people can't think beyond the present and don't care about the future costs of government decisions. Government, give me more middle class welfare, more tax relief, more concessions; I don't care if the country goes broke. All I care about is me.

        • abb on 04/09/2018 - 17:20

          We can arrive at the Liberal voter's point of view by only replacing two words with one. This is a fun game!

          Government, give me more middle class corporate welfare, more tax relief, more concessions; I don't care if the country goes broke. All I care about is me.

    • SES on 31/08/2018 - 12:36
      +2

      I see what you did there, 'Rocket Surgery'… might start using it myself lol

    • keenbeans on 31/08/2018 - 13:14

      Don't see the problem with these businesses - in fact they are super beneficial in helping you manage working capital and keep cash locked in investments for longer (time value of money benefits).

      Agree with everyone above in that you should only be using these services if you can already afford the good/service, not think of it as "free money" to buy the goods I can't afford.

    • cloudy on 31/08/2018 - 15:08

      I don’t agree to say these people are adults, legally allowed to spend money and being adults is different. Remember afterpay is not a lender, it isn’t governed by responsible lending, they can offer their service to minors.

      Their average account user is 31. The average Aussie consumer is probably 40-45 if I hazard a aguess.

      • HighAndDry on 31/08/2018 - 15:17

        they can offer their service to minors.

        They very specifically do not though, this is a strawman.

        • cloudy on 01/09/2018 - 22:37
          +1

          I dont really understand "very specifically do not".

          An article today confirms minors have gotten credit.

          What are your thoughts on resonsible serving of booze? is that dumb too, people should just be "adults" and stop drinking when they think its right?

          what about driving, why not let people just drive to whatever speed they think is right? i mean everyone behind the wheel are adults right?

          Hell, why have gun laws?

        • WaywardOne on 07/09/2018 - 19:54

          @cloudy:

          This is my favourite post.

          I think that if there is so much revenue from late fees then perhaps their lending criteria is not strict enough?

    • wozz on 31/08/2018 - 15:10
      +1

      too right. Seems too many people don't like accepting responsibility for their own actions.

    • Tejas57 on 31/08/2018 - 15:37
      +4

      I have used afterpay a few times (as a matter of fact i made a final payment this morning)

      one was for some flights to go interstate for a wedding. Could i have saved and brought the flights in a few weeks? sure, but there is no guarantee on price. I got the flights and actually paid them off early.

      All the items i got have been paid off early because i know my limits. i do one item at a time and i don't go overboard

      Next for me will be a new 4K Tv from Big W

      • FutureTech on 01/09/2018 - 07:21
        +3

        But wish gift card will give you 5 percent off

    • AddNinja on 01/09/2018 - 17:54
      +2

      This is why I am sometimes for the nanny state and laws protecting these people from themselves. Because I agree with you - people getting stung by this are of low IQ. But what do you do? They literally need protection from themselves. I don’t believe it is enough to say that business like Afterpay should be left unregulated because the people that use them are simply incapable of making good decisions. It is not enough to say “they are adults - they made a bad decision and now they must live with it” when they literally are incapable of making smart decisions. When they go into debt, it drags others around them down and causes wider damage to society. Shouldn’t we regulate this business to save low IQ people from themselves…

      • HighAndDry on 01/09/2018 - 18:01
        +3

        Shouldn’t we regulate this business to save low IQ people from themselves…

        The problem isn't with the business though. You could make the same argument about these people eating nothing but junk food and literally hurting themselves by bring afflicted with chronic health issues.

        The government can't force feed them a healthy diet.

        What about if they drive but don't carry third party insurance and so could bankrupt themselves with one accident?

        Or if they're just bad (not merely awkward) at social interactions, have no friends or support network and increase the risk to themselves of psychiatric illnesses?

        No. At some point you do just say:

        “they are adults - they made a bad decision and now they must live with it”

        That's what being an adult means. Or else put them into a government run institution with actual nannies, and spare the rest of us the nanny state.

        • AddNinja on 01/09/2018 - 18:55
          +3

          I agree that it is fair in the sense that they get the privileges of being an adult, so they should have to pay the price of adult responsibilities as well. But I also wonder, can we as a society do better that. I mean there are people and companies out there whose business model is to legally trick people into acting against their own best interests, they know it - and so I suspect you do to. For example, I don’t think AfterPay is providing an essential service. I would prefer to live in a society where that kind of business was regulated. On a moral level, personally, I don’t think it healthy for an individual to trick a dumb person into something that you know is not in their best interests. It might be legal, but it is kind of nasty.

          Finally, I’m sure you will still be able to get easy credit if AfterPay is regulated. This nanny state law is not for you.

        • AddNinja on 01/09/2018 - 19:01
          +1

          I agree that they can’t be forced fed a healthy diet. Furthermore, I think there is a case to be made that an individual has a right to eat unhealthy food - no matter how dumb the decision, But I don’t think regulating an industry is like that. An individual doesn’t have the right to credit. And if some people need protection from themselves regarding credit, and it is relatively easy to implement, why not?

        • AddNinja on 01/09/2018 - 19:22
          +4

          Half a million adults in Australia have an IQ less than 70. 4 million people have an IQ less than 84. Here is what these people are capable of (according to some guy: https://paulcooijmans.com/intelligence/iq_ranges.html)

          70-79 — Borderline retarded
          Limited trainability. Have difficulty with everyday demands like using a phone book, reading bus or train schedules, banking, filling out forms, using appliances like a video recorder, microwave oven, or computer, et cetera, and therefore require assistance from relatives or social workers in the management of their affairs. Can be employed in simple tasks but require supervision.

          80-89 — Below average
          Above the threshold for normal independent functioning. Can perform explicit routinized hands-on tasks without supervision as long as there are no moments of choice and it is always clear what has to be done. Assembler, food service.

          These people contribute to our society positively, but I think they need our support. One way we can offer it is by stopping them buying stuff they can’t afford on credit.

        • M1ndFu7 on 02/09/2018 - 23:16
          +4

          @AddNinja:

          Also to add on to this, research have shown that being poor lead to lower IQ. This combined with predotary business like Afterpay will create a vicious cycle for people who are poor to begin with.

          Hence why these businesses should be regulated with process such as credit check etc.

          https://www.independent.co.uk/news/science/poverty-intellige…

      • lddv04 on 03/09/2018 - 16:02

        Can't manage AfterPay but can have children! Go figure!

        • try2bhelpful on 03/09/2018 - 17:08
          +3

          True but until we allow eugenics on a grand scale then this will continue to happen.

    • AustriaBargain on 02/09/2018 - 19:24

      Afterpay could educate these vulnerable people on the benefits of avoiding fees, it’d be a public service for sure. But 28m is a lot of m.

      • HighAndDry on 03/09/2018 - 08:43
        +2

        It's literally:

        Pay on time, save on late fees.

        Not sure how much edumicating you can do there on top of basic English.

        • try2bhelpful on 03/09/2018 - 09:45
          +2

          We aren't all "canny" - even here we see people who fall for scams, and we would be considered to be better aware than most. Should people be better "yes" are people better "no" - should we do what we can to try and protect people from their own stupidity - "yes". I much prefer fences at the top of cliffs rather than ambulances at the bottom so if this takes big warnings as to what these loans mean, and giving better assitance to people who need loans for "essentials" then I think that is a good idea. You are giving me a good idea for an app, where you put in all your afterpay/payday loans entries and it will calculate for you the weekly payments and what the costs will be if you default on anything. This might be a nice clear way of showing people the consequences - the loan people are quite good at hiding all of this in the fine print.

          BTW - Did you hear Shorten's Au Pair joke - he said Dutton was turning Australia into a nanny state.

        • AustriaBargain on 03/09/2018 - 10:41
          +1

          When I see people with late fees on Afterpay I can’t help but think there goes, but for the grace of God, myself.

        • try2bhelpful on 03/09/2018 - 10:47
          +1

          @AustriaBargain: When we bought our first house interest rates were above 20%. We both had good jobs and inflation made buying a house a good choice but we could've come a real cropper if either of us lost our jobs. Makes me shiver even now to think about this.

          Also we got pretty badly ripped off by using car finance for our first new car - the interest rates were bad but we weren't savvy enough to realise we should've gone to the bank instead. Again, we could afford to learn this lesson but we could've been in trouble as well in different circumstances.

          "There but for the grace of god go I" indeed.

    • ely on 03/09/2018 - 14:51
      +1

      Goddamn, I hate it when you're right.

    • abb on 04/09/2018 - 17:24

      You know what the solution is? Don't buy s*** you can't afford, and don't be late in repaying your debts. It's not rocket surgery.

      Sure, but being poor very literally makes your brain work less well.

      See, for example: https://www.theatlantic.com/health/archive/2018/05/how-incom…

      (Also, financial literacy is pretty woeful in Australia in general, I'm not sure why. Probably could do with being emphasized a bit more at school?)

    • white3knight on 05/09/2018 - 22:03
      +1

      Just my exact thoughts OP. Those idiots blame the company when they cant help themselves from purchasing items they cant pay. Real adults there what a joke.

  • Cheaplikethebird on 30/08/2018 - 14:54
    +23

    Doesn't suprise me in the slightest. They dont charge interest, where did you think they were making their cash?

    • scotty on 30/08/2018 - 15:16
      +13

      From merchant fee, which is 30c + 4 to 6% of commission (which is already significantly higher than credit card). According to this ABC piece (probably a better article than the NewsDaily one),

      Afterpay reported that it earned 24.4 per cent of its income from late fees — and 75.6 per cent from merchant fees (charging retailers commission for each sale).

      Although at 24.4% it's still quite high.

      • HighAndDry on 30/08/2018 - 15:26
        +6

        I would've thought it was the other way around - only a quarter of their revenue is from customers, and the rest are from actual retailers? It's not like they do any marketing for the shops, or direct any more business that way, they just make shopping more affordable upfront. Good bargaining skills, able to extract that much from retailers.

        • pformag on 31/08/2018 - 12:56
          +1

          Same charges as Paypal. Customers want options at the checkout.

        • twister292 on 01/09/2018 - 05:09

          @smigglejiggle: Paypal charge 2.6%, and I'm sure larger retailers can negotiate better rates than that

        • Laurenlauren on 02/09/2018 - 03:36

          They absolutely direct more business that way.

    • AustriaBargain on 02/09/2018 - 19:26
      +1

      According to their own data Afterpay causes people to spend more at participating stores than they otherwise would, making the retailer a profit on the vast majoroty of Afterpay sales despite needing to pay the Afterpay fee.

  • GG57 on 30/08/2018 - 14:59
    -5

    The OP appears to be an accurate report. What would you like us to discuss?

    • Sage on 30/08/2018 - 19:11
      +4

      Our opinions of this report.

  • Donaldhump on 30/08/2018 - 15:00
    +5

    i can only imagine what peoples mortgage defaults will become in the next 5 years when interest rates rise

    • trilby on 30/08/2018 - 15:07
      +1

      That is a little different - interest rates are clearly variable, so you know that increases may occur, but Afterpay banks on people shopping for items they can't afford and most probably don't need and then having trouble paying it back - you can't say they spring any surprises.

      • Donaldhump on 30/08/2018 - 15:14
        +18

        just dimwits in general as adults unable to determine what they can and cant afford. i am a pretty poor person, but i dont go and buy cr*p i dont need or cant afford.

        all the gronks on a current affir blaming the bank for lending them $800k when they only earned 60k a year and now cant afford it.. people need to stop blaming others… its not that hard to budget and its pretty simple maths

      • scotty on 30/08/2018 - 15:21
        +2

        Afterpay banks on people shopping for items they can't afford and most probably don't need and then having trouble paying it back

        I am not so sure about that. Afterpay makes the majority of their revenue from merchant fee (4-6% commission of the transaction). If people pay late, yes they would get extra revenue from late fee. However if there are increasing number of late fee payments, they should be worrying about people start to default which Afterpay will then have to write off the debt themselves.

        • twister292 on 01/09/2018 - 05:11
          +1

          I think the point being made is that AfterPay (and ZipPay) enable a whole bunch of customers to enter the retail market for discretionary items which they would otherwise probably never buy upfront at full price…

          They are making money from retailer commissions, but the key question is, in the absence of AP, would those sales occur at all? I'd guess a lot of them won't.

        • scotty on 01/09/2018 - 05:26
          +2

          @twister292: that's very true. Small boutique fashion retailers are willing to put up with 6% commission fee because it makes sales that otherwise won't — from the demographic that don't want to use (or couldn't have) credit cards.

        • twister292 on 01/09/2018 - 18:49

          @scotty:

          To reconfirm what we just said:

          Financial product comparison website Mozo conducted a survey of 1,000 customers across the nation who use Afterpay and found the results "surprising".

          About 650 of those customers believed small digestible payments were influencing them to make purchases they would not normally make.

          I know, not a huge sample size, but that's a sizeable number of people buying things they normally wouldn't

      • Homr on 31/08/2018 - 15:29
        +1

        ohhhh, so is that how my peers are able to afford the latest Samsungs, Apples, Versace's, Christian Louboutin shoes, Gucci's on a monthly basis

  • tsunamisurfer on 30/08/2018 - 15:10
    +45

    I absolutely love hearing stories like this.

    People who complain about late credit card fees, pay day lenders. This is ALL the borrower's doing yet they try to blame the lender when all fees were clearing stated in the PDS they signed off on.

    There are no vulnerable consumers only stupid consumers.

    There are no irresponsible lenders, only irresponsible borrowers.

    • [Deactivated] on 30/08/2018 - 16:09

      everyone is so hard done by, like the people who complain about the police targeting speeding, or parking, instead of just playing by the rules like the rest of us

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