Financial counsellors are sounding the alarm over Afterpay's latest offering, Afterpay Plus.

The new $10 monthly subscription service allows consumers to access credit, even in stores that do not support Afterpay. 

Concerns are mounting that this move will make unregulated credit more accessible, potentially trapping vulnerable borrowers in debt.

Afterpay Plus facilitates borrowing through Apple Pay, Google Pay, or Samsung Pay with a simple card or phone tap, enabling “buy now, pay later” transactions at more stores.

Fiona Guthrie, Chief Executive of Financial Counselling Australia, has expressed deep concerns about this new subscription model, saying it could entice financially strained individuals struggling to make ends meet. 

She highlighted that existing buy-now-pay-later services already provide easy access to unregulated credit, and Afterpay Plus lacks meaningful affordability checks and safeguards.

“We already know buy now, pay later as an unregulated credit product is too easy to get, so we're concerned this will mean more people will find themselves getting in over their head,” she said. 

“Credit is not the answer to financial difficulty, it only makes it worse.”

Consumer Action Law Centre's CEO, Stephanie Tonkin, says buy-now-pay-later apps often exploit legal loopholes to evade regulations, a trend she finds deeply troubling amid rising living costs. 

She noted that people are increasingly relying on these credit products for essentials like food, energy, and telecommunications services. 

“Let's not forget, these are credit products with little or no regulation, and people shouldn't have to pay a monthly fee on top,” she said.

Karen Cox, from the Financial Rights Legal Centre, has described Afterpay Plus as a “frictionless, poorly regulated” recipe for debt, noting that some consumers are already exploring insolvency options to cope with their buy-now-pay-later debts.

In response to these concerns, an Afterpay spokesperson has defended Afterpay Plus, stating that the company maintains stringent consumer protections to safeguard users. 

The company says it is positioning Afterpay Plus as a safer, interest-free alternative to credit cards, highlighting that 95% of all Afterpay instalments were paid on time in the second quarter of this year, and 98% of purchases incurred no late fees. 

The spokesperson also drew a contrast with the credit card industry, suggesting that Afterpay fosters more responsible financial behaviour compared to traditional credit cards.