Fresh from a Senate probe into the buy-now-pay-later sector, market leader Afterpay has announced a move into the travel space that flips the script on its core business model.
The new platform, called PLAY, is the result of a deal with holiday layby business Layaway and is, in essence, a pay-now-travel-later service.
Customers pay for their holidays in a series of interest-free instalments prior to their departure date.
The rationale is simple: millennials like to travel, and Afterpay has lots of millennial customers.
Afterpay Group head David Hancock said there’s a market of 11 million international trips a year the business can sink its teeth into.
“Taking the Australian passion and hunger for travel into account, what we’ve endeavoured to do with PLAY is to create high-quality, well-thought-out packages to provide experiences they may never have had before, but also manage payment in a way that is responsible,” Hancock said in a statement circulated on Wednesday.
Trips to the Whitsundays and Fiji are already up on the platform, with options for payments made over a two-to-12 month period.
Fee wise, missing a scheduled payment will cost customers a $7 administration fee (capped to $35), while missing more than five payments will suspend an account.
Cancelled holidays will draw a $55 fee, and a financial hardship program has been put in place, similar to through Afterpay.
The fast-growing buy-now-pay-later businses is walking a carefully constructed line with the new venture after experiencing scrutiny in recent months.
A Senate inquiry into buy-now-pay-later operators earlier this year did not recommend extending consumer credit protections to Afterpay and competitor Zip, but ASIC has been given new powers to intervene in the emerging industry.