As more older people shop online, the controversial financing model is growing in popularity for the over-60s.
The pandemic propelled many first-time shoppers into the realm of e-commerce.
More than 300,000 people shopped online for the first time last year, according to NZ Post's annual e-commerce review, and the largest area of growth was among the over 75s.
NZ Post considers people who make more than 50 online transactions a year 'super shoppers' and last year, of the 258,000 'super shoppers', customers aged over 75 dominated growth. Online transactions were up 44 percent for over 75s and spend was up 85 percent last year compared to 2019.
A significant trend was buy now pay later (BNPL) financing becoming a popular payment method for those aged over 60.
NZ Post attributes this growth to. the older generation’s familiarity with the original layby concept or perhaps the financial pressures brought on by Covid requiring many to adopt spread payment options.
Gary Rohloff, managing director of BNPL company Laybuy, says the Covid pandemic has brought forward New Zealanders' acceptance of online shopping by five years.
"During the lockdowns last year, virtually all shopping was done online. People who normally wouldn't shop online like my 85 year old parents were shopping online," Rohloff says.
"These schemes can look attractive if you don't have cash on hand, but late payment fees can make them turn sour. If you find you can't pay it all you might have a debt collector show up at your doorstep and your credit score could be affected as well." – Jessica Wilson, Consumer NZ
As a result, more older shoppers were becoming aware of the different financing methods.
"People assume BNPL is used by younger people only. But our database has customers from 18 years to 80. BNPL is used by people wanting to budget differently and access credit without using a credit card."
Despite the name, Rohloff's Laybuy isn't like the traditional layby model.
It's more like hire-purchase because customers get their product before having paid for it in full.
Laybuy saw 150 percent year-on-year growth in 2020.
BNPL companies don’t charge interest, but they make their money from late payment fees for customers who don’t meet their weekly or fortnightly deadlines and merchant fees for offering the service.
These services have copped criticism for making customers vulnerable to debt.
In 2019 BNPL services grew by a massive 105 percent and this service has continued its rapid growth trajectory on 2020, with spend up again by a further 57 percent, NZ Post's report says.
Last year Australian Securities and Investments Commission found missed payment fee revenue for all BNPL providers in Australia review totalled over $43 million, a growth of 38 percent.
Some companies like Laybuy and Afterpay have put in financial hardship policies.
Rohloff says late fees were dropping among Laybuy's users because it had a function that suspended defaulting accounts until they paid back the money.
The majority of BNPL are still young, below the age of 45, NZ Posts' report says.
And the concern is that while some companies may have voluntary codes of practice, it is largely unregulated.
Organisations like Consumer NZ continue to lobby for greater regulation of the industry, especially as these services become popular post-Covid.
Its head of research Jessica Wilson says: "These schemes can look attractive if you don't have cash on hand, but late payment fees can make them turn sour."
"If you find you can't pay it all you might have a debt collector show up at your doorstep and your credit score could be affected as well."
