The buy now, pay later phenomenon that has taken the retail world by storm is now set to shake up Sydney’s rental market.
A new platform backed by EML Payments and Ezidebit Australia is offering a specialist buy now, pay later service for renters to split their bond over four fortnightly instalments.
Known as Flexibond, the offering is currently valid to NSW residents only and covers bonds up to a maximum of $10,000, and with a 0 per cent interest rate.
While a 0 per cent interest rate sounds appealing, Flexibond does charge users a 5 per cent activation fee based off the total bond amount. This would see someone with a $2000 bond charged a fee of $100, which is equivalent of a 32.50 per cent interest rate — nearly double the typical credit card interest rate.
The scheme comes off the back of research conducted by Flexibond, which found 53 per cent of Australian renters say they find it hard to save for a bond.
Flexibond founder and CEO Christopher Bailey said the company hopes to reduce the stress and financial burden of renting.
“Flexibond addresses a gap in the market for a ‘Buy Now, Pay Later’ solution that can empower customers to access funds on a digital prepaid card without any commercial merchant agreements needed,” he said.
“Our goal is to help these customers find financial freedom by disrupting the property market and challenging traditional credit providers.”
The rental bond is paid for by a digital MasterCard that is issued to the renter at the time of approval and is valid for 48 hours. Like other buy now, pay later platforms, the bond is then repaid by a tenant in four instalments charged to their debit or credit each fortnight.
The company is enticing consumers with the promise of no credit checks because it says real estate agents conduct one during the rental application process.
EML Payments CEO and managing director Tom Cregan said Flexibond would provide positive disruption within the rental system.
We’re determined to ease the burden faced by renters across the country by removing a significant part of the stress involved in searching for a new home,” he said.
The company hopes to expand its offering to the rest of Australia as time goes on.