Zip is a buy now pay later (BNPL) platform that offers an alternative to credit cards that charge high annual fees and interest rates. It currently offers two products, Zip Pay, which offers up to $1,000 in credit for “everyday spending”, and Zip Money, which is meant for purchases worth more than $1,000. Both can be used for purchases online or at physical stores, but they differ in how long you can make interest-free repayments and the minimum amount you need to repay. Consider checking the conditions relevant to your credit needs before deciding on Zip Pay vs Zip Money.
What’s the difference between Zip Pay and Zip Money?
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What is the difference between Zip Pay and Zip Money?
You may ask if Zip Pay and Zip Money are two names for the same thing considering they are both BNPL services. But there are distinct differences between the two products in their purpose and features. Below is a short explanation of these differences:
Zip Pay:
Zip Pay is the small expenses option that offers you interest-free repayments when you make purchases from $350 up to $1,000. You can repay the amount borrowed in fixed instalments that start from as little as $10 per week, with no fees charged unless you miss a repayment. You can also decide whether you want to make your repayments every week, fortnight, or month.
Zip Money:
Zip Money offers customers credit of over $1,000 with no interest charged for at least three months, depending on the retailer. Any unpaid balance will be charged interest after this interest-free period, with the rate currently set at 19.9 per cent. The maximum you can borrow can vary between $3,000 and $5,000 based on the duration you have been using the service. Zip Money does allow customers to borrow up to $50,000 for purchases with some retailers. And customers can typically choose the amount they are comfortable regularly repaying, with $10 per week being the minimum.
You may have to pay a service charge of $7.95 when using either Zip Pay or Zip Money, but this charge is waived if you pay off your Zip Pay balance in full by the due date. However, when using Zip Money, this service fee will be charged every month for the duration it takes you to repay the amount borrowed fully.
How do you shop using Zip Money and Zip Pay?
You can use both Zip Money and Zip Pay to shop either online or at physical store locations. The process for doing this is slightly different when shopping online vs in-store.
Before shopping online with either Zip Money or Zip Pay, you should confirm that the merchant allows customers to “Pay with Zip”. You can then add the items to your cart and check out by selecting Zip as your payment option. You will need to sign in to your Zip account to complete the purchase. You can also create a single-use card from the Zip app for purchases online if you can’t “Pay with Zip”.
However, when shopping at a store, the payment process is somewhat different for Zip Pay and Zip Money. You can add Zip Pay to your digital wallet on your phone, such as Apple Pay or Google Pay, and then pay by tapping your phone at the store counter. This payment method is only available at stores that accept Visa payments. To pay using Zip Money at stores, you need to generate a barcode using the Zip app, which you can then get scanned at the store’s checkout counter.
Does using Zip Money or Zip Pay affect your credit rating?
Yes, it might. Like any other time you apply for credit, Zip will run a credit and background check when you first sign up. As long as it all checks out, they’ll approve your account and give you access to the funds.
Keep in mind that if you default on your regular payments, you will incur late fees, and you risk harming your credit score. This is where Zip is very similar to other credit products such as credit cards or personal loans. If you fail to make your repayments, they will notify the credit reporting agencies like other credit companies impacting your credit rating.
Is it safe to use Zip Pay and Zip Money?
It is just as safe to use Zip Pay or Zip Money as it is to use other similar products. Both services are governed by the Australian Privacy Principle (APPs) and the Privacy (Credit Reporting) Code, 2014. Therefore, there’s no risk of your personal information and bank details getting misused. If you’re concerned that your details have been compromised, make sure to contact Zip as soon as possible.
Questions you may have
What are the alternatives to humm I could consider?
Afterpay and Zip Pay are the leading BNPL providers in Australia. However, they only allow smaller transaction amounts, comparable to the 'Little things' wallet on your humm account.
If you are looking for help with a bigger expense, Brighte is one BNPL platform that may allow you to borrow a maximum of $30,000 for up to 60 months. However, Brighte generally only offers interest-free payment plans for making energy-efficient upgrades to your home, such as solar and batteries, or other home improvement projects.
Do BNPL service providers charge late payment fees?
BNPL service providers will invariably charge you late fees if you miss your repayments, which can range from $5-$15 each time the payment is delayed. Late payment fees are also usually capped at either a set dollar figure or as centage of the outstanding balance.
Can I sign up on multiple BNPL platforms?
You can sign up for multiple BNPL services, but consider using just one platform as you will be accumulating multiple debts otherwise, which can be difficult to keep track of. You also risk having to pay more fees to more providers.
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Product database updated 23 Nov, 2024
Fact Checked
This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.
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