MENU

Do you get a retail discount when you DON’T pay with Afterpay?

Afterpay Touch Group Ltd (ASX: APT) has completely changed the retail landscape.

Not since of the introduction of MasterCard and Visa cards in Australia has the shopping and payment process changed as much.

Afterpay charges $0.30 transaction fee and a commission that the retailer pays, of between 4% to 6% of the sale price. Plus Afterpay receives any late fees if the customer doesn’t make the repayments to Afterpay on time.

For now, retailers using Afterpay are seeing a rise in sales, perhaps because it brings forward sales rather than fundamentally increasing the overall cashflow in the system.

However, some commentators are pointing out that retailers may soon see Afterpay as an expensive cost and could increase prices to compensate. That would mean that non-Afterpay users would be paying higher prices to theoretically subsidise the users of Afterpay.

Gareth Brown from Forager Australian Shares Fund (ASX: FOR) has suggested that everyone who is willing to pay upfront should ask for a discount, such as 5%, where buy now, pay later options are available.

It does make sense why upfront-payers could be given a discount. Why should people pay more for goods if they have nothing to do with the higher costs of the business due to Afterpay?

Afterpay users could actually make themselves better off by using Afterpay considering there are no costs of using the service if you pay on time. Imagine if you were trying to maximise every dollar. You could pay through Afterpay, and with the temporary cashflow delay you could put that cash in the bank and earn interest until the next Afterpay instalment was due. But, that would be a lot of effort for not much reward. I think it’s best to just pay upfront for items.

I applaud Mr Brown for suggesting that people paying upfront should be rewarded. I appreciate that Afterpay is a wonderful new system, but it may end up penalising people who don’t use it if retailers increase their prices to compensate.

Afterpay is an interesting investment opportunity, but I would rather buy shares of these top ASX shares.

JUST RELEASED: Our Top 3 Dividend Share Picks for 2019

NEW! The Motley Fool’s team of crack analysts has just released a timely report revealing the names and codes of their top 3 dividend share recommendations for 2019. Be among the first investors to get access—FREE, for a strictly limited time. You’ll discover the names of 3 hefty dividend paying companies with what our analysts consider to be solid growth prospects for the year ahead…

The first two currently offer fat, fully franked yields and the third is a surprising REIT offering you the chance to become a landlord with none of the hassle! If you’re looking for hot new ideas, look no further. But you do need to hurry. Snap up your free copy now, before supplies run out!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our top 3 dividend share recommendations right away.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now