It’s an international trend – at this year’s Coachella music festival in California over 60 per cent of attendees purchased their tickets using BNPL platforms.

Katrina Konstas, country manager for Afterpay Australia, says the service is a “healthier way to pay” when compared with interest-charging products such as credit cards, and young people are embracing the tool to avoid missing out.

“They’re not spending recklessly, but they are choosing to make very manageable purchases … these are customers who don’t have credit cards, they don’t want credit cards, but they want to be able to have more flexible ways to pay,” Konstas says.

Formerly employed by American Express, Konstas says she has “first-hand experience” of how interest-fuelled debt impacts consumers, and Afterpay offered “an honestly healthy approach to budgeting”.

However, there is growing concern that BNPL services are hurting Australian consumers. Rose Bruce-Smith, senior policy officer at the Consumer Action Law Centre, said for some Australians products such as Afterpay made sense for larger discretionary purposes, but they should not be viewed as altruistic financial tools.

“People suffer a lot of harm from the fees that Afterpay charges, and they do end up in debt spirals where they are borrowing from different third-tier providers to meet their essential living costs,” says Bruce-Smith.

“Afterpay, they’re there to make money, they’re not out of the goodness of their heart coming up with this product that’s better for people to use.

“It’s awesome for those users who are very, very confident they can avoid all those penalties, but that’s quite a small cohort. The whole model is profitable because there is a larger cohort of people that are incurring those penalties.”

Bruce-Smith was also critical of the suggestion that recent federal regulations requiring credit checks for new BNPL customers meant BNPL services could be used for groceries, as flagged by Afterpay co-founder Nick Molnar, in comments to The Australian Financial Review this month. Most food and beverage retailers, including the major chains Coles and Woolworths, had not added Afterpay to their checkouts due to the lack of regulation, Molnar said.

“The headlines from America about defaulting on your burrito loan are totally concerning. We’re lucky that we haven’t gotten to that point yet. That is the direction we have been going in, as an economy … there needs to be a chilling effect on that at some point,” Bruce-Smith says.

Online memes about American consumers defaulting on micro-loans for food items such as burritos went viral in March this year after Swedish BNPL firm Klarna partnered with US food delivery service Door Dash.

Olly Arkins, managing director of the Australian Festival Association, says the sector was not surprised by the popularity of BNPLs in ticket purchasing, and it was “indicative of where the public are at”.

“Since COVID, the industry has faced a whole range of challenges, from increased costs from putting these shows on, to a low Aussie dollar, and cost-of-living challenges were impacting people’s ability to commit to buying a festival ticket,” Arkins says. “Having the ability to stage their payments by using these products didn’t really surprise me.”

Arkins said festival attendees aged 18 to 25 had a lower discretionary spending capacity, and that festival organisers had been working to keep prices affordable despite increased costs.

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“Festival tickets – in terms of increases over the last few years – have definitely not raised at the same level as [festival] costs have,” Arkins says. “I think organisers have acknowledged that they need to remain competitive and affordable.

“Any arts/live performance reporting will state that music festival tickets are the [most expensive] in any kind of live performance because the offering is so extensive.”

Moshtix, one of the largest vendors of festival tickets in Australia, partners with BNPL platforms Zip Pay and PayPal to allow customers to break up ticket transactions into several payments.

A spokesperson for Moshtix said the company was “committed to making live events more accessible”, and that BNPL platforms offered concertgoers “more flexibility” in purchasing tickets.

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