'Buy now pay later' (BNPL) schemes have taken off. With approximately 360 million BNPL users, we're beginning to see patterns of spending that are worrying for the future of individuals and the climate alike.
1. BNPL feeds emotional spending in vulnerable people
The attraction of BNPL as a 'quick fix' has fast fashion written all over it. I've mentioned before the desire for immediate relief through emotional spending and how this tends to have a knock on effect. The more we turn to spending in light of emotions, the less satisfying it becomes, and so, the more we feel we have to do it. A double-edged sword made possible by BNPL.
As well as spending more frequently, people are spending more money. 59% of people said they bought things that they otherwise couldn't afford. This has a huge consequence considering the half life of fashion in the current climate is at most a year, if not 6 months. I don't know for sure, but I wouldn't be surprised if some buyers are becoming bored of their new clothes, before they've finished paying them off.
Those who do tend to splurge can become victim to BNPL because it makes these desires accessible. When asked about it, 66% of users admitted to finding BNPL financially risky - however they still continued to use it. This shows a universal feeling of doubt when it comes to paying off BNPL loans, yet the spending habits continue.
2. Increase in debt
For clothes in particular, if one doesn't have the money, it's probably not the right time to buy. The danger with BNPL in casual shopping is that small costs are incrementally added so that we don't see the debt stacking up. This contributes to the 56% of people that have fallen behind on making a payment through BNPL. So buying now and paying later means that the next time you buy, you have more than a 50% chance of adding onto an outstanding payment from the last spend. This pushes people further and further behind.
These cycles of debt are prevalent when people continue to purchase before having paid off their last cost. This feels low in consequence at the time, however late fees are making significant cost increases. 42% of people who have made a BNPL have paid a late fee on one of those loans. This isn't a promising stat for new users when nearly half end up spending more money than those without BNPL.
3. More spending = more production
Afterpay are proud of the fact that upwards of 40% of their users spend and buy more than they would without the scheme. But is this a good thing? When you consider that this spend increase translates into production increase, the effect on the planet must be huge. All this does is feed the fast fashion eco-system, maxing out it's already enormous growth.
As people tend to purchase more items when they use BNPL, they're owning things they otherwise wouldn't have. Although this results in unnecessary cost being added to the list, it also means that the lifespan of these items will be much shorter than items that have been planned. If there wasn't a need before purchase, there won't be once it's been delivered. It in turn just adds to the excess amount of waste that fast fashion already produces.
We can't tell you what to do with your money, however we stand by wanting to create a space that encourages spending guilt and stress free. That once you've saved up for your item you'll feel empowered, confident and proud of yourself for purchasing from a grounded place.
Use 'Before-PAY' and reap these rewards.
It includes the cost breakdown of every Simple Studios item to save for either 1, 2 or 3 months. It also features printable saving planners and a guide on how to use it.
And it's free.