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Consumer advocate lawyers are concerned about Uber’s decision to integrate buy now pay later (BNPL) technology into the app, while the rideshare company says it’s being innovative for customers.
BNPL platform Afterpay said it’s “excited” to pair with Uber.
But consumer advocates say allowing people to borrow money for small transactions like Uber rides could contribute to “debt spirals”.
Consumer Action Law Centre senior policy officer Rose Bruce-Smith told SBS News it’s “concerning” that Afterpay is becoming more accessible and is being used more for everyday purchases, when it was previously reserved for discretionary items.
“We know that people are optimistic about how much they’ll be able to repay in the future. Uber is something that is almost an essential, and we regularly speak to people who can’t pay for essentials and get further and further into debt with these services,” she said.
Afterpay charges users fees if they miss their scheduled repayments, which are up to 25 per cent of the purchase price or $68, whichever is less.
Uber told SBS News it is “constantly looking for ways to enhance the experience for everyone who uses the Uber and Uber Eats app, and this includes providing users more flexibility and control over how they pay for their rides and meals”.
According to a survey by financial comparison site Finder, an estimated 41 per cent of Australians have used BNPL products in the past six months.
National Debt Helpline coordinator Vicki Staff told SBS News it’s “worrying” that these services are trying to “normalise” their own use, which means people “have the potential to spiral” into compounding debts.
“We worry that a lot of people are using buy now, pay later, setting up multiple accounts, and then using it to buy lots of small discretionary type services or products,” Staff said.
“What we often see as financial counsellors on the National Debt Helpline is all of these direct debits coming out of people’s bank accounts to pay for multiple buy now pay later accounts, and people can’t keep track of it. And so things start to spiral and they get out of control.”
Responding to calls to regulate the sector, the federal government last month introduced new laws that require providers to hold an Australian credit licence, comply with existing credit laws, and have also established a new category of low-cost credit under the Credit Act.
Afterpay co-founder Nick Molnar said at the time he was glad the services were given “legitimacy” by the government and that he would want to see Afterpay used wherever a credit card is.
Bruce-Smith said that ambition was “concerning”.
“There are checks and balances with a credit card, which is very different from this sort of tech-first approach to integrating your business into every payment system we have.
“I think it’s pretty disappointing that Afterpay has used the instruction of legislation to use the legitimacy of that to aggressively expand into new areas in Australia.”
An Afterpay spokesperson said in a statement that the company is committed to giving people “flexible, transparent” ways to manage their spending.
“This partnership with Uber — one of the most widely used apps in everyday life — reflects growing demand for safe, simple, and affordable payment alternatives,” the spokesperson said.
“Afterpay has no fees when customers pay on time, with no risk of revolving debt spirals.”
