How 'buy now, pay later' became sexist

Thursday, 14 November 2019

Buy now, pay later is increasingly popular, but can cause issues for those that don't keep up with repayments.

OPINION: The 'buy now, pay later' industry is growing rapidly, and it's doing it by targeting women.

Buy now, pay later loans from the likes of Afterpay, Oxipay and Laybuy, allow shoppers to buy something they can't afford now and pay for it over four or six weeks.

There are fees (including late fees for people who miss payments) but these are otherwise interest-free loans, and their use grew at 16 per cent in 2018, and is continuing to expand.

I shop, therefore I am happy: The fashion and clothing industry has done a great job of capturing women and equating beauty and fashion with happiness.

More than a quarter of a million New Zealanders have signed up to 'buy now, pay later' schemes, and research shows it's women who are taking on the bulk of buy now, pay later debt.

* Here's why part-payment plans can be great**

Marketers adopt sales strategies that work. If targeting one sex yields the best results, they will do it.

Buy now, pay later has found greatest demand in encouraging fashion and footwear retail, an industry that has taken a massive bite out of women's wealth over the years.

One fifth of all clothing and footwear was bought with buy now, pay later loans in 2018, NZ Post estimated last year.

Women have been the primary targets of fashion clothing and footwear for years, and image counts on buy now, pay later company homepages show men are a secondary target.

The homepage of the Afterpay website had 22 images of women to 14 images of men.

The count on the Laybuy homepage was nine women to four men.

Buy now, pay later lenders have pushed hard to get women's fashion stores to offer its loans in-store, and the industry, which has never been shy at finding new ways to get women to spend, has been more than willing to comply.

It's working.

Fully 70 per cent of the users of buy now, pay later were women, NZ Post found.

There was a long fight to get fund managers, banks and insurance companies to normalise the idea of women saving and investing by presenting gender-balanced marketing material like KiwiSaver disclosure statements.

There will be no reverse fight to get the buy now, pay later industry to be gender neutral.

Buying any luxury good using debt is a bad idea.

Saving for relatively low-cost items like clothing and electronics is always preferable.

It is cheaper, and it does not result in a debt that can come back and bite you later should you fall ill, lose your job, or have any other form of cash crisis.

It's always better to be in the black than the red when it comes to consumer spending. Anything else just enriches the lenders.

A lifelong pattern of saving before spending is one that will set young people up for life, and it is young people, women especially, who are the big adopters of buy now, pay later.

There may, however, be a more positive aspect to women's adoption of buy now, pay later.

Women are, in general, better payers than men. They go bankrupt less frequently, and have slightly higher average credit scores.

If they are opting for buy now, pay later over higher-cost credit card debt, or personal loan debt, they might be making a relatively better choice.

Women also still make relatively more household purchases than men, so some of the over-representation of women in buy now, pay later use may mask couple, or family spending.

But on the whole buy now, pay later is just another form of consumer debt, and women are falling for it.

GOLDEN RULES:

* Buying luxuries using debt is risky and expensive

* Save before spending

* Always spend less than you earn