how to buy now, pay later apps influence youth spending

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Young people are often criticized for making irresponsible choices with money.

But the real issue isn’t whether they’re eating too many expensive coffee breakfasts. Young Australians today face an uncertain job market, rising university fees and astronomical house prices. Unfortunately, debt is also an inevitable part of their life.

This comes against the backdrop of a dramatic increase in the number of “buy now, pay later” apps, such as AfterPay, and payday lending apps, such as Nimble. It is possible to make purchases online with the push of a button, even if you have no money in your account or on your credit card. It is also possible to be able to borrow money in a few minutes.

To better understand how young people negotiate their debts, we interviewed 31 people aged 18-29 in the Newcastle and Hunter Valley area in 2020 and 2021. We asked them how they access credit and their perspective on credit. different types of debt.

Our study

Our participants saw debt as a necessity if they are to have an acceptable life in the present and plan for the future. As Steph, a 22-year-old college student, said:

Large debts like the mortgage, the HECS debt […] stuff like that, I guess in a way it’s useful debt. It makes sense and it allows you to go further because there is always fairness in what you do … It doesn’t follow you as badly as some other debts.

Young people also made distinctions in how debt is felt and how accessible it is. They recognized that short-term consumer debt might not be “good”, but felt that it was also part of the ability to buy things and have the experiences associated with being young.



Read more: What is the difference between credit and debt? How Afterpay and Other “BNPL” Providers Bypass Consumer Laws


People we interviewed referred to AfterPay (where you pay off debt in four installments) as a part of everyday life. As Alexa, a 23-year-old college student, told us:

AfterPay is for small needs that I don’t want to pay up front.

They also described it as a low risk, almost user-friendly way to buy things. This was particularly the case in relation to a bank. Alice, a 21-year-old saleswoman, puts it this way:

AfterPay is like, “Oh, just pay this in four quick things and you can have your item. We will send it. But then the banks are like, ‘If you don’t pay that back, you’re going to have so much interest and it’s going to suck, and you’ll have the sheriffs in your house and you’re going to be sad.’

Like ordering a pizza

Respondents attributed some of this user-friendliness to the process of accessing money or goods. Mia, a 21-year-old paralegal, described applying for a small loan on the Nimble app:

When you ask for money […] you can follow it anytime on it. The Nimble app is so much like ordering a Domino’s pizza […] While a credit card through a banking app is not like that […] They send me letters and even opening the mail terrifies me, nothing good ever comes in the mail.

The straightforward, online nature of these loan services is closely related to how young people are more generally involved in the information in their lives. In that sense, there is familiarity and comfort in the way they work.

As Mia continues:

[It’s] positive, it’s not intimidating, it’s informative, it’s instantaneous. The second the money comes out, I get a thank you email and a notification on the app. It’s like, “You have so many payments left, this is how much you have paid, this is how much you have left to pay, you will still be paid in full by that date.” I don’t have any of that stuff with my credit card.

Familiar tactics

Interviewees also explained how services like AfterPay and short-term loan apps use tactics similar to social media platforms to encourage increased engagement and make the experience informal and even social.

According to respondents, applying for a loan through an app does not involve “scary” paperwork.
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These include “that day” reminders (for example, “around this time last year you bought that pair of shoes”) and wait time indicators. There are also game elements, including “rewards” for prepayments.

Those interviewed knew it was manipulation. Lilian (26) works in a chain of clothing stores and has been “rewarded” for paying for a purchase earlier.

I got this thing the other day saying my first payment [on a new purchase] will really come out [later] now. Of course I was rewarded for paying everything early [before] […] Yeah, it’s like it’s delaying him, it’s not a problem now, but it’s gonna be a problem in two weeks.

After that ?

Our interviewees may see debt as a necessity, but they are also aware that they have (some) choices in this area. They therefore prefer to turn to suppliers or platforms that feel less threatening, especially since the use of “buy now, pay later” services sometimes does not give the impression of getting into debt.

Young man on his phone with a coffee.
Young people see debt as an inevitable part of life, according to a new study.
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There is a need to better regulate how these products are promoted. It should always be clear that this is a form of debt, not just a means of paying.

Beyond that, instead of “blaming” young people for their spending habits, we need to better understand the economy and the society in which they live and work. safe and precarious housing.


Steven Threadgold also discusses how to buy now, pay later apps influence youth spending on the Seriously Social podcast from the Academy of Social Sciences in Australia.

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