You can sign up for multiple Buy Now Pay Later (BNPL) services in Australia. However, as is the case with any credit products, there may be risks associated with accumulating numerous debts.
BNPL services are platforms that allow you to buy something today that you then pay for over time through a number of small, interest-free repayments. Think old-school layby meets the digital world - except that you don't have to wait to pay in full to receive your purchase.
In late 2022, the Australian Treasury released a working paper outlining options to regulate the BNPL sector in an effort to prevent people from accruing multiple debts they can’t afford to repay.
The BNPL industry is currently self-regulated by an Australian Finance Industry Association (AFIA) Buy Now Pay Later Code of Practice. However, the code is voluntary and while companies including Afterpay, Humm, Klarna, LatitudePay, Openpay, Payright and Zip Pay have all signed up, new entrants such as CBA, NAB and PayPal have not.
How many BNPL accounts can you have?
Given the lack of regulation surrounding BNPL, you may be able to open multiple accounts with different providers. However, this may not be a sensible practice as it might be difficult to keep track of all your debts and you could miss payments, potentially resulting in late fees and charges.
A BNPL provider may conduct a credit inquiry (sometimes known as a “soft” credit check), which is similar to when you check your own credit rating, but this won’t affect your credit score. Some BNPL providers may conduct a “hard” credit check when you apply, especially if you’re applying for a larger account limit, as this can help them better assess your risk as a borrower.
BNPL services can be accessed via an app or online from the provider's website. Different retailers will allow different BNPL services to be used at the checkout, so it’s best to research which stores are affiliated with a BNPL service before you sign up.
Although BNPL may be a convenient payment option, it can be challenging to juggle multiple repayments along with all your other financial commitments, so be wary when signing up for more than one account.
What can happen if I miss BNPL repayments?
While most BNPL platforms don’t charge interest or account keeping fees, they may charge late payment fees and could report defaulted loans to credit reporting agencies, jeopardising borrowers’ credit scores.
BNPL fees differ from platform to platform, but generally range from $5 - $15 for each late payment. Late payment fees are also typically capped at a set dollar figure or a percentage of the outstanding balance.
Even if a BNPL provider doesn’t charge you any fees for late or missed payments, you may be subject to bank overdraft fees if the account used to sign up for the service is tied to the loan.
Some BNPL providers, like Afterpay, require that you make your first payment upfront. Many platforms also apply spending limits on purchases and these may increase over time if you meet repayments.
Tips to avoid getting into trouble using BNPL platforms
- Read the terms and conditions and understand which fees may apply
- Set strict spending limits
- Limit yourself to one platform, and one purchase at a time
- Avoid impulse purchases. Sit on any major purchases for at least 24 hours
- Each platform should have a hardship policy that can assist you in rescheduling payments and more
