Credit cards slump as customers shift to buy now, pay later

AFR:
https://www.copyright link/companies/financial-services/credit-cards-slump-as-customers-shift-to-buy-now-pay-later-20200512-p54s4z

The number of credit cards in the market has fallen by 7 per cent over the past year, Reserve Bank data shows, as more customers turn to buy now, pay later services as the COVID-19 crisis unfolds.

"Credit cards may become the new Seniors Card, as youth stick with debit," said Lance Blockley, managing director of The Initiatives Group.

It now appears even older customers are willing to try buy now, pay later services - which could lead to an even faster decline in credit card usage.

Spending on debit cards - which are typically linked to buy now, pay later services - was up 11 per cent over the same period.

He said rising bad debts during the recession were a concern but appear benign at this stage.

"Near-term volatility is expected, however, looking longer term is key as the buy now, pay later structural change is only gaining momentum, as offline and old forms of credit are being usurped," he said in a recent report.

On an investor call last week, Sezzle, which competes with Afterpay in the US, said it had achieved record figures in April, adding 114,400 new active customers and 1100 new merchants as US online spending rose.