The BNPL offer is simple enough: customers are allowed to spend money they don’t have by delaying payments for products. It lets them split the cost of their purchase into interest-free instalments, or pay in full up to 30 days later – and is offered both in-store and online. But although BNPL may seem like a good interest-free solution at the time, in the longer term, it risks causing significant financial problems.
Missing payments is where the main danger lies with BNPL
Right now, BNPL schemes are associated predominately with popular fashion retailers, including ASOS, Urban Outfitters and JD Sports, and are particularly attractive to the under-35s customer base. Hastee research, however, has found that 56% of 18-24 years olds feel BNPL schemes encourage them to spend money they don’t have.
Making spontaneous purchases without considering the financial implications, or really understanding the terms and conditions, is a major concern. BNPL can create a domino effect of debt if consumers fail to keep track of their repayments and budget properly. Research shows more than two million customers have damaged their credit rating by not using BNPL correctly – a consequence that 40% of users were unaware of.
The various negative effects of BNPL can also affect employers. Out of those surveyed in Hastee’s 2019 Workplace Wellbeing Study, financial stress for 27% of employees affected their performance at work, with this rising to 38% among millennials.
Hastee – a safer alternative to BNPL
In 2019, Hastee found that a third of workers felt they needed to borrow money before payday – making them more susceptible to schemes like BNPL. So, it’s vital for employees’ financial wellbeing that they manage their finances in a way that doesn’t store up problems for later on.
Adopting a flexible pay benefit like Hastee’s Earnings on Demand, allows people to spend a portion of the money they’ve earned – not money they don’t have – this is the crucial difference.
Looking after employees’ financial wellbeing is good news, not just for workers, but for the business. Because when people experience greater financial stability they’ll spend less time worrying about their finances and more time focusing on work and being productive.
“Missed payments can impact credit scores, cause longer term debt problems and could create an unhealthy reliance on high cost credit as users struggle with repayments.” – James Herbert, CEO of Hastee
To find out more about Hastee’s Earnings on Demand and how it could benefit you and your employees, get in touch with us today.