MyPayNow is the shiny new toy of the financial industry but is the service too good to be true? (Image Source: ABC)
By Chelsea Shepherd | @Chelsea15183902
MyPayNow is the newest service that claims to get its customers out of financial trouble, but it could be causing more harm than good.
The app allows you to access up to 25 per cent of your wage in advance. This amount is then repaid via weekly direct debits after your full wage lands in your bank account.
The service has been compared to ‘buy now, pay later’ schemes such as Afterpay and Humm, which allow users to purchase items and pay for them in weekly installments.
If you’re reading this thinking, ‘Wow I could really use some cash before payday to buy some new shoes or go out for drinks with friends’, I suggest doing some research into the pros and cons.
MyPayNow is accessible via its website or free app and takes minutes to set-up, making it all the more instant and accessible for its users.
To sign up you must enter your details and fill out information about your salary, and your employers don’t need to be notified.
When you’re in need, you can choose an amount up to 25 per cent of your wage and if your details are correct, it should get approved instantly, with the money in your bank account seconds later.
Then, the painful part; making the repayments.
You will get direct debited on pay day for the following four weeks.
Once you’ve repaid the money, you can access more of your wage early again, and repeat the process.
General manager of MyPayNow, Nic Bennetts, said, “People want access to their money as they need it.”
“If a customer misses a payment, the service will be temporarily blocked until the payment is rectified.
“We do not charge any late fees or missed payment fees. We have found that consumers are finding such great value in the service that they are quite proactive to rectify any missed payments.”
Unlike Afterpay, there is a 5 per cent fee added to your repayments after accessing your wage early.
“The 5 per cent fee is used to further improve our services to assist even more Australians with accessing their wages early. We believe 5 per cent is an incredibly fair and reasonable fee and it aligns with all current laws and legislation.
“We have a very long to-do list of improvements and things we can automate to further enhance our customers experience, and having the option for clients to pay out early via the app [or] website is on that list. Until such time that it is automated, clients will need to get in contact directly to arrange early payout,” Mr Bennettse said.
Credit risk is a crucial factor that would influence someone’s ability to repay their debt to MyPayNow, yet their website does not give a clear indication of how they analyse someone’s financial situation in order to approve their loan.
“There are various factors that are taken into consideration, for example: income, the amount of gambling, missed payments et cetera. We have an incredible machine on the back-end of our service that allows us to provide the smooth user experience that our customers see on the front-end,” Mr Bennetts said.
As the app is in its early stages of development, Mr Bennetts said there are improvements to be made and other elements of the app that they wish to grow.
“We are developing a user-friendly budgeting tool that will be available to all of our clients to assist with those wanting to improve their overall financial wellness. We are also looking to provide a virtual card that sits in your mobile wallet,” he said.
As with Afterpay, short-term, small loans seem easy, effortless, and not much of a financial burden, but banks are warning that having these apps may come back to hurt you when it comes time to apply for a loan.
In a statement from COMTEX, Financial Counselling Australia CEO Fiona Guthrie suggested restricting the amount that people can borrow on a payday loan to 10 per cent of their net income.
In the same statement, Consumer Action Law Centre’s director of policy and campaigns Katherine Temple stated “someone in need of short-term cash would be better off going to a financial counsellor rather than dealing with any payday lenders.”
Before using a service such as MyPayNow, please consider speaking to your bank or a financial advisor to find out whether it is the right decision for you.