Online auction giant Trade Me is extending its Afterpay service into new categories, including mobile phones, computers, and gaming.
Trade Me teamed-up with Sydney-based fintech Afterpay in May to deliver deferred payments to buyers.
The Afterpay service, backed by Kiwi business icon Sir Ron Brierley, allows Trade Me sellers to offer interest-free deferred fortnightly payments to buyers via Afterpay.
At the time, Trade Me’s head of marketplace, Stuart McLean, said ASX-listed Afterpay lets buyers get the item in their hands straight away but pay it off in four interest free installments.
“Sellers receive their money straight away from Afterpay and can ship the goods straight away - the buyer then makes their payments to Afterpay,” McLean said.
Afterpay has been described as, essentially, a real-time debt factoring system, where a company sells its accounts receivables to a lender for a discount, said to be around 4 per cent.
The company has been a stellar success since listing on the ASX in May and merging in June with Touchcorp, the company which developed its technology platform to form Afterpay Touch.
Afterpay listed at A$1 a share and Touchcorp was trading at around the same before the merger. Yesterday Afterpay Touch shares were trading at A$5.56.
Writing on the Canstar consumer ratings website earlier this month, Gerard Brody, the CEO of Australia's Consumer Action Law Centre said there was a boom in the use of such services.
Instant approvals have made "buy now pay later" enticing for Christmas shoppers, he said.
"Recent reports suggest that 5 per cent of all online retail sales and 20 per cent of online fashion sales are now processed using Afterpay, which is Australia’s most popular ‘buy now pay later’ provider," he wrote.
Brody, however, raised concerns that such providers are not required to play by the same rules as other credit providers.