The dangers of mixing BNPL with alcohol
A research team from Deakin University's School of Psychology is currently investigating whether the surge in buy now pay later (BNPL) offerings pose an increased risk of harm to those using them to pay for alcohol.
BNPL products were introduced into Australian pubs and clubs last year, raising questions about whether they are associated with more “financial hangovers” than other means of payment such as credit cards.
"While we know that many people use BNPL services responsibly, for some it is a recipe for financial difficulty," says Dr Hannah Bereznicki, a researcher in Psychology's Centre for Drug, Alcohol, and Addiction Research (CEDAAR) and the Centre for Social and Early Emotional Development (SEED).
"When it comes to on-premises consumption, people are more likely to make their purchasing decisions while intoxicated, which could lead to poor decision-making, such as over-spending and over-consumption.
"These schemes work because they allow consumers to obtain a product or service immediately, then pay back the loan in instalments. The loans are interest-free, but there can be hefty fees and penalties applied to late or missed payments. More recent BNPL schemes do not have fees, but they still encourage people to over-commit financially."
Bereznicki adds: "BNPL is unregulated credit, meaning that financially vulnerable people may be more likely to access a loan than use credit cards, and they will receive less protection if they do get into financial difficulty.
"We also know that some people resort to paying off their repayments with high-interest credit which drives them further into debt.”
Most licenced premises using the BNPL option to sell alcohol are in Melbourne, Sydney, Brisbane, and Perth. Alcohol home delivery paid for via BNPL operates Australia-wide and some rapid home delivery services also offer BNPL.
Director of CEDAAR and study investigator Professor Peter Miller says low-cost alcohol increases consumption, which in turn increases the risk of alcohol-related harms.
“Injuries, assault, and emergency department presentations are linked to alcohol consumption.
"If alcohol is perceived to be cheaper due to payment instalments, people may drink more than they intended and could be at greater risk of experiencing these harms."