It is an online shopper's conundrum. You find those killer blush booties, but they bust your budget. Enter Afterpay, a payment system that lets you buy now and pay later -- interest-free.
That sounds intriguing to college student Kristina Kish.
"I think it would be cool to be able to pay in payments and still get what you want," Kish said.
Afterpay, which is popular in Australia, where the tech company is based, launched in the United States in 2018. It is now available at more than 1,000 U.S. retailer websites like Urban Outfitters, Anthropologie, Forever 21 and Steven Madden.
Many of the stores cater to younger shoppers who often do not use credit cards.
So how does it work?
Say you are buying a $120 dress. When you choose Afterpay at checkout, you agree to pay in four installments of $30. The first is due at purchase and the remainder is due every two weeks. But you get the dress right away.
Karl Pichler, a finance professor at Trinity University, sees digital credit platforms as innovative.
"The pro is you get something for free, which is a loan," Pichler said. "Your major drawback is you have to be certain you can pay the schedule you are committing to."
That is because there are fees -- of which $8 is for missing a payment. If it's still unpaid in seven days, another $8 is tacked on, and so forth. However, fees are capped at 25 percent of the purchase price and, if you are behind in payments, you can’t keep spending.
Afterpay does address responsible spending on its website.
While payment plans can be helpful, particularly with higher-dollar purchases, it is still debt. Pichler cautions they are more suited for people who are financially disciplined.
"If you can’t pay right away for a $40 T-shirt, maybe you shouldn't buy it," he said.
Afterpay makes money by charging the retailers a fee for each purchase. For the stores, it's a way to attract customers and purchases.