Buy Now Pay Later in NZ — Afterpay vs Laybuy vs Zip vs Gem

Buy Now Pay Later has changed how New Zealanders pay for things. The model is simple: you buy an item, pay a portion upfront, and the rest in instalments over subsequent weeks or months. No interest is charged if you pay on time. Late payment fees apply if you miss a payment. The BNPL provider makes its money from merchant fees, not from borrower interest.

The appeal is obvious. A NZ$200 pair of shoes becomes four payments of NZ$50 each. A NZ$1,000 appliance becomes ten payments of NZ$100 each. The instalments fit into a weekly budget in a way that a lump sum does not. The risk is that the total of all your BNPL instalments across multiple purchases exceeds what you would have spent with a lump sum, because the pain of paying is spread out and less noticeable.

The Major Players

Afterpay is the largest BNPL provider in New Zealand. It offers the pay-in-four model — four fortnightly instalments, with the first due at purchase. The maximum order value is capped at a level that varies by customer. Late fees apply if payments are missed. Afterpay charges merchants a fee on each transaction, which is how it generates revenue. Afterpay is available at a wide range of NZ retailers, both online and in-store.

Laybuy offers a similar pay-in-six model — six weekly instalments — with a higher maximum order value than Afterpay in some cases. The longer repayment period makes Laybuy suitable for more expensive purchases. Laybuy also charges late fees for missed payments and generates revenue through merchant fees. Laybuy is available at many of the same retailers as Afterpay.

Zip offers a more flexible model. Customers can choose their repayment schedule, and Zip charges a monthly account fee in addition to late fees. The Zip model is closer to a traditional line of credit than a pure BNPL product. Zip has a higher maximum credit limit than Afterpay or Laybuy, making it suitable for larger purchases.

Gem Visa operates differently from the pure BNPL providers. Gem offers interest-free periods on purchases from participating retailers, typically six to sixty months depending on the promotion. If the balance is paid within the interest-free period, no interest is charged. If it is not, interest is charged from the purchase date at a rate comparable to a credit card. Gem's model works well for large purchases like furniture, electronics, or appliances where the buyer is confident they can repay within the promotional period.

Afterpay, Laybuy, and Zip report payment data to New Zealand credit reporting agencies, which means missed BNPL payments affect your credit file. This is a relatively recent development — BNPL providers did not always report to credit agencies. A missed payment on a NZ$50 Afterpay instalment now has the same credit file impact as a missed payment on a credit card. Using BNPL responsibly can build positive credit history. Using it carelessly can damage it.

The Costs

Late fees vary by provider and by transaction value. A single late fee on one missed instalment can be several dollars. Multiple late fees across several purchases add up quickly. The effective cost of BNPL, if you miss payments regularly, can be higher than a credit card's interest charges on the same balance.

There is also the spending effect. Studies in multiple countries have found that BNPL users spend more than they would without the service, because the instalment structure reduces the psychological pain of paying. The extra spending is not necessarily on things the buyer cannot afford — it is often on things the buyer would not have bought at all if they had to pay the full price upfront. The risk to the consumer is not the late fees. It is the accumulated total of purchases that would not have been made without BNPL.

Using BNPL Wisely

BNPL is a useful budgeting tool when used deliberately for planned purchases. A NZ$500 winter coat that you need and would buy anyway is a sensible candidate for BNPL — the instalments match your pay cycle and the total cost is the same as paying upfront. BNPL used impulsively for multiple small purchases across several stores is the pattern that causes problems.

Setting a rule helps. One approach is to use BNPL only for purchases over a certain amount, so the small impulse purchases are paid in full. Another is to limit the total number of active BNPL plans to two or three at any time, so the total monthly commitment stays manageable. The simplest rule of all: if you would not buy it if BNPL were not available, do not buy it with BNPL either.