Pay It Later: What is it and how does it work?

Pay It Later works like any other buy now pay later (BNPL) service, allowing you to purchase items up to your approved credit limit (capped at a maximum of $1,000) and pay for them in four weekly instalments. What sets Pay It Later apart is the P2P option on the Pay It Later app that can be used to buy second-hand items from independent sellers online. 

Pay it Later is a buy now, pay later (BNPL) platform founded in Brisbane. It allows you to make purchases up to $1,000 and pay them back over four weekly instalments. Additionally, Pay It Later offers a unique Person-to-Person (P2P) service that makes it possible to purchase goods directly from other people. Therefore, unlike big players like Afterpay and Zip Pay, you can use Pay It Later to buy second-hand goods from sites like Gumtree. You can also use Pay It Later to pay for your online shopping from small, independent retailers on various e-commerce sites.

For sellers, Pay It Later offers an easy way to collect money and grow sales by providing their customers with interest-free payment plans. 

How does it work?

Like most buy now, pay later platforms, Pay It Later allows you to buy what you want and pay for your purchases over time. The platform is mainly oriented towards online shopping. You can select Pay It Later as your preferred payment method during check out to avoid paying for the item upfront. Instead, Pay It Later will set up a payment plan for you, charging your linked debit or crebit card in four weekly instalments until the balance is paid off.

You don’t pay any interest on your weekly instalments, and there are no additional charges for using the service. However, you could be hit by late fees if you are unable to make a repayment on time.

Once approved, you can sign up for the service online through the website and use it like any other BNPL platform. You can also apply for instant approval by choosing Pay It Later as your preferred payment method while checking out your shopping with a partnered merchant. Note that you can only use the service if you are 18 years or older. You should also have a verifiable email address, an Australian mobile telephone number, and provide a valid delivery address in Australia to sign up. 

Once approved, you can shop as usual up to your approved credit limit and pay back the amount in four weekly instalments. The maximum amount you may be allowed to spend using Pay It Later is capped at $1,000. However, you may be approved for a smaller amount – as decided by the platform after verifying your details. You may request to increase your credit limit for a purchase or find it increasing automatically as you build your repayment history. However, Pay It Later will always obtain your approval before increasing your credit limit if you have not requested it.

Pay It Later also offers a P2P option that can be used to buy and sell second-hand goods at online marketplaces. All you have to do is select the P2P option on the app. This enables the seller to generate a barcode that you can scan to set up a payment agreement, providing a reasonably secure way to buy and sell goods.

Does Pay It Later charge any interest or fees for using the service?

Using Pay It Later can be free as long as you meet your repayments on time. However, if you miss a repayment because there are insufficient funds in your account, you will be charged a $10 payment fee. If an instalment remains unpaid for another seven days from when it falls due, a further $10 late fee is applied.

Will using Pay It Later affect my credit score?

Using Pay It Later isn’t going to affect your credit score directly. Even though the BNPL firm carries out reasonable background and financial checks before approving a purchase, it doesn’t run a credit check on you directly. Instead, Pay It Later says it uses a third-party provider to perform identity verification for users. 

Such soft checks carried out by the company do not appear on your credit file or hurt your credit score directly. However, the BNPL firm reserves the right to report your financial behaviour to credit reporting agencies. Therefore, failure to repay your instalments could lead to a default being marked on your credit file, which will also hurt your credit score. 

If you think you are falling behind on your payments, Pay It Later allows you the flexibility of moving your payment schedule for a fee of $25 per order. However, you can only move your payment plan once per Pay It Later order. If you are finding it challenging to keep up with your payment plan, it could be worth reassessing your budget to cut down on unnecessary expenses. You may also consider seeking help from a financial counsellor to find a long-term solution to your problem. 

Overall, it’s important to understand that your buy now, pay later shopping is also a form of credit. While platforms like Pay It Later can help you manage your big purchases or emergency expenses by breaking them down over a span of four weeks, they can also encourage impulse buying because you can purchase what you want without paying anything upfront. You may want to consider planning your finances in advance and budgeting for your BNPL spending so that you only use the service to buy what you can afford to repay. 

If you tend to shop impulsively or find it hard to stick to a budget, it may be better for you to stick to your savings instead of using a BNPL service to avoid accruing unnecessary debts.