Extended access to buy now, pay later schemes in hospitality venues could have significant impacts on Australia’s most vulnerable, including veterans in financial crisis.
Bravery Trust is a nation-wide military charity that provides an immediate financial safety net and financial counselling for veterans facing financial hardship due to injury or illness sustained during service. It receives an average of 500 phone calls each month.
Chief Executive Officer Belinda Wilson said she was concerned by news Afterpay would extend its service to restaurants and hospitality venues.
“We have two people who’ve recently reached out to us, each of them has 18 separate debts with buy now, payer later services,” said Ms Wilson.
“Vulnerable people, especially those with mental health challenges and addiction issues, are racking up more debt than they can manage, exacerbated by late payment fees that they can’t afford.”
Ms Wilson said many veterans in hardship had contacted Bravery Trust seeking support after taking out multiple simultaneous loans with buy now, pay later schemes.
“Because the different schemes don’t share information, buyers can access several loans from several schemes simultaneously,” she said. “In some cases, the purchases are affordable at the time, but Covid-19 restrictions have brought about unexpected loss of income.
“In other cases, mental illness may cloud the decisions being made, or financial literacy skills may be limited. 85% of those who reach out to Bravery Trust have both mental and physical injuries and a quarter of veterans supported by Bravery Trust reported spending above their means.”
Bravery Trust supports calls for increased regulation and more extensive credit checks to protect the most vulnerable members of our community. Purchases made using Afterpay are repaid in instalments every two weeks.
Missing an instalment results in an immediate $10 fee and further fees if not paid within a week.
While the dollar amount may seem relatively low, if you had seven purchases on the go up to a value of $2,000 and you missed the payments on all of these, you could be charged up to $476.
Any serving or ex-serving members of the Australian Defence Force facing financial hardship due to injury or illness can call Bravery Trust on 1800 272 837.
Bravery Trust can provide emergency payments and financial counselling; and advocate on behalf of veterans with banks, debtors and landlords. 70% of those reaching out for assistance are aged 50 years or younger.