Alcohol is the latest item consumers use to buy now, pay later. But a bigger problem lurks underneath.

Last Friday, after receiving a torrent of complaints, a Bottle-O liquor store in Panmure in Auckland announced that “until further notice” buy-it-now-pay-later provider Afterpay was no longer available as a payment option “with immediate effect”. In a victory for advocates concerned with the combination of booze and short-term credit, the turnaround comes nearly a month after the store said the “wait is over” when proudly announcing its acceptance of afterpay.

But the fact that bottle shops are even allowed to accept the latest unregulated form of credit has raised fears that Natalie Vincent, chief executive of Ngā Tāngata Microfinance Trust, could face further harm to indebted consumers if action is not taken. taken quickly.

Buy-n0w, pay-later, or BNPL, is a fast-growing form of credit that allows people, in-store or online, to buy goods or use services immediately and to spread payments over equal installments over one to three months. A late fee of typically $10 is charged for each missed refund. Providers like Afterpay, Laybuy, and Humm typically make money by charging participating retailers a fixed fee or a percentage of the price of the good or service.

Panmure’s Bottle-O has given up accepting Afterpay after store owner Ketankumar Satpute was subjected to vitriol online in response to customers’ update on the store’s Facebook page. A screenshot of the post has been circulating on Twitter, with users expressing concern. One wrote: ‘unless there are booze trucks roaming our streets[,] it’s as bad as the liquor business gets”. In a follow-up Facebook post, the store said it was revising its policies.

Vincent de Ngā Tāngata runs an organization providing low-income whānau with low interest and no-cost loans, as well as access to a support network of independent financial mentors. She knows too well the pitfalls of BNPLincluding that New Zealand laws do not recognize it as a form of credit – the rules requiring credit card and loan providers to review an applicant’s creditworthiness to ensure they can meet their financial obligations do not apply to this innovative new credit alternative.

Another risk of BNPL is how quickly users can get into unmanageable debt. Vincent says that three clients of Ngā Tāngata collectively owed $2,000 to BNPL’s suppliers, two of whom passed the debts on to debt collectors which Ngā Tāngata repaid. Another claimant had accounts with four providers and needed to make 16 refunds per month. In 2021, the trust began requiring applicants to disclose the extent of their BNPL indebtedness.

Credit schemes are already available for craft beer and natural wine, and listed on the Afterpay website are Thirsty Liquor Tauranga, Premium Liquor, Merchants Liquor Queenstown and Containerdoor. Vincent says it is new to Aotearoa that BNPL is entering the day-to-day liquor retail market of beers, wines, premixes and spirits that these stores cater to. She discovered Bottle-O on Thursday night, when a friend sent her a screenshot of the Facebook post, and was horrified. Society can go no further than encouraging the BNPL’s indebtedness – a “social scourge” – on alcohol purchases, she says. “Alcohol…is not a necessity of life. We should be ashamed that this continues.

But it’s not the shop owner’s fault, says Vincent. The fact that liquor stores are allowed to accept it is a bigger issue. While BNPL providers have dedicated teams to help users get back on track with their refunds, the Department for Business, Innovation and Employment (MBIE) is still deliberating on the risk of financial difficulties caused by BNPL. Submissions on the discussion paper closed in December 2021 and the ministry is reviewing comments. Friday, a The Commerce Secretary’s spokesman, David Clark, told One News he would “soon” present recommendations to the cabinet.

The ministry’s accompanying survey shows:

• 44% of nearly 1,800 respondents use the BNPL at least fortnightly and three-quarters have more than one provider;
• about 90% have other debts in addition to the BNPL;
• almost 80% use BNPL when they cannot afford the full price of a product;
• almost 90% use BNPL to shop for clothes and shoes while almost half use it for everyday items; and
• one in five people have missed at least one payment.

In a survey by the trust, nearly a quarter of Ngā Tāngata customers said they use BNPL to buy groceries, with some commenting that rising food prices have increased their supermarket bill. “Allowing this to happen for all consumable purchases, without any regulation…this is unacceptable,” Vincent said. “But allowing them to buy alcohol with it is a disgrace.”

In Australia, the link between BNPL and alcohol is striking. Researchers at Deakin University in Victoria are studying the different methods people use to buy alcohol, and experts are already concerned that the shift to BNPL could lead to “financial hangover”. In late 2021, hotel operator Australian Venue Co partnered with Afterpay to roll out the program to over 180 pubs, restaurants and bars, sparking fears that debts could swell for Australians already under financial pressure. The same fears exist in United States, where cash-strapped consumers faced with rising costs of living turn to BNPL for fuel, groceries and their daily coffee. United Kingdom, more than a third of consumers I think BNPL has become more attractive since the cost of living started to climb.

New Zealand’s alcohol industry is back in the crosshairs of parliament after Auckland Central MP Chlöe Swarbrick’s Members Bill to amend the Sale and Supply of Drinks Act 2012 alcohol was drafted last week. The law change proposes to abolish appeal processes on local alcohol policies, ban sponsorship and advertising in a bid to remove the link between sport and alcohol and reduce the young people’s exposure to these messages.

Although the CEO of Ngā Tāngata does not know all the details of Swarbrick’s bill, Vincent supported the proposal. “Banning alcohol sponsorship for sports and other things is a no-brainer,” she says. “With buy now, pay later, [you] don’t even need to have money, so we’re making it even more accessible. Urgent action is needed, with the latest example “highlighting the potential damage”, says Vincent. “Buy now, pay later is a social scourge. This is overwhelming more and more people with debt problems. We see it every day.

“It will only be five minutes before more and more liquor stores around town and across the country do the same. Every day there is more and more risk of harm if we don’t act quickly and do something about it.