By Teuila Fuatai - RNZ

In the small, predominantly Māori town of Kaikohe, residents struggling with high living costs are using Afterpay to buy things like gas.

The buy-now-pay-later service lets you purchase goods and services at a quarter of the cost, then pay off the total in three fortnightly instalments.

For some families, it means being able to get kai on the table that week. But it is also not without risks. While the repayments are interest-free, any users who miss an instalment, or are late with a repayment, are charged a fee.

On the main street in Kaikohe, locals had mixed feelings about the service.

One woman RNZ spoke to described it as a “sucker punch or sucker pull”.

“It’s like spending your money before you have the money. I think it just suckers people in. They get all these things, and then they can’t pay for it.”

Another local said he liked Afterpay because it lets him “spread out my tick”. The man said he last used it to pay for birthday presents.

Alex “Moko” Tango had been dubbed the “Afterpay queen” of Kaikohe, because she used it to pay for nearly everything, including groceries, hair appointments and vet visits.

The week Checkpoint spoke to her, she had used it to buy groceries and household items from The Warehouse. She had also paid for a tank of gas, and taken her two dogs to the vet.

In Kaikohe, a range of stores let people pay with Afterpay, including the Z petrol station, the chemist, The Warehouse, a mechanic’s garage and a flooring installer and bed shop.

Tango said without Afterpay, she would not be able to pay for a lot of the things she needs.

She was not currently working because of health reasons and relied on the supported living payment.

“It’s the reality of knowing I’d have to save that money over eight weeks,” she said.

“So even though it’s fortnightly for Afterpay, I know what my weekly budget would be to cover, instead of having to wait eight weeks after the fact to save in my budget to pay [for things].”

That week, the vet bill for Tango’s two dogs came in at just under $300 and her petrol cost $148. The Warehouse grocery shop came to about $170, which Tango says should last for two weeks.

Tango also stressed Afterpay only works for those who are diligent budgeters, which she had learnt to do as someone who lives on a benefit.

“I can honestly say as a beneficiary, it has conditioned me to be able to live in this type of budget-threshold.”

Alex “Moko” Tango says without Afterpay, she would not be able to pay for a lot of the things she needs. Photo / RNZ - Nick Monro

And while Tango had never been penalised for missed or late repayments as an Afterpay user, the Salvation Army warned not everyone finds the buy-now-pay-later service easy to manage.

Senior policy analyst Ana Ika said it was easy for people to rack up debt without realising it.

“Last week, I looked over a lot of our client’s case notes .... [in] someone’s case they [were] spending over $367 a week in [paying] back buy-now-pay-later. The majority of that is paid out of their benefit so it creates a lot of financial hardship for that individual and their family.”

Nationally, more than 500,000 people in New Zealand have used Afterpay in the past nine years, according to the company.

The popularity of services like Afterpay among people Salvation Army works with showed benefit and income levels were not enough, Ika said.

Ultimately, income and benefit levels should be adequate so people could afford essentials like petrol and groceries, and not turn to buy-now-pay-later services like Afterpay, she said.