Balance needed on pay-later services


Pharmacy groups including TerryWhite Chemmart and Chemist Warehouse have joined a trial of Afterpay, prompting criticism from some experts

Following its successful expansion into the dental and optometry sectors, Afterpay – which allows consumers to pay for their purchases in four equal instalments each fortnight, without any added fees if they pay on time – last week confirmed it would trial the service in other healthcare sectors, including pharmacy, radiology and general practice.

Prescriptions are not included in the service, it said in a statement.

To date Afterpay’s site lists four pharmacy retailers: Chemist Warehouse, Pharmacy Online, TerryWhite Chemmart, and Chemistdirect.com.au.

Afterpay’s Mathew Cagney, Head of Healthcare, says the decision to expand its services into the healthcare sector means more Australians will be able to manage their health related expenses as part of an overall budget.

“With more than 11 million Australians not having access to ‘Extras’ cover, we are meeting a genuine need—and for those that do have cover, there is nearly always going to be a gap payment that needs to be made.

“We are receiving strong customer feedback that Afterpay is making healthcare more affordable for Australians, allowing them to get the treatment they need whilst managing their other household expenses,” Mr Cagney said.

However, mainstream media have reported concerns with the move into health care, including pharmacy.

The New Daily’s John Elder noted that as set out in Afterpay’s statement, its average “healthcare customer” is a little older than the average, at 35 years of age, compared to 33.

“As the pharmacy-related lending takes root – with the abundance of older people on long-term medication – that average is bound to get higher. Is this move intended to chase the ageing dollar?” he wrote.

He spoke to Paul Harrison, director of the Centre for Employee and Consumer Wellbeing at Deakin Business School, who said that the move is a sign of “commodification of health services”.

Meanwhile Fairfax media spoke to Professor Rosalie Viney at the University of Technology Sydney’s Centre for Health Economics Research and Evaluation.

Health reporter Kate Aubusson wrote that “at pharmacies, the prospect of financially vulnerable people using Afterpay to cover a few dollars for subsidised drugs ‘would be quite concerning’, Professor Viney said.”

The AJP spoke to Pharmaceutical Society of Australia national president Dr Chris Freeman, who said that some caution was warranted, but highlighted that not all products available from pharmacy are included in the service.

“It’s not on prescription items – it’s important to make that very clear,” he said. “There is no capacity to purchase pharmaceutical products which have been dispensed upon prescription through this service.

“It’s clear to me that through the uptake of services like this, there is a degree of consumer demand for these types of services. We’ve seen this through other sectors like dentistry and optometry, so it shouldn’t be a great surprise that people are considering this in other sectors of health.

“But I would caution pharmacists and pharmacies as to how they might implement this within their own environment, in that the people they’re dealing with are often the most vulnerable – from a health perspective, often with acute or chronic illnesses – and often vulnerable from a financial perspective.

“As I understand it, these pay-later style of services do derive some of their revenue from people not being able to afford the repayments and having late fee penalties, so people may end up spending more money than if they’d purchased the product up front.”

Dr Freeman said there needed to be a balance between consumer demand for such services, and the responsibility of the pharmacy in providing products and services to a vulnerable population.

A spokesperson for the Pharmacy Guild said that “business operating procedures are decisions made by individual pharmacies”.

“Facilitating access to the services and products of community pharmacies in the interests of improved patient outcomes is a fundamental principle of community pharmacies.”

The last 10 months have seen more than 1,100 dental and optometry practices around Australia offering Afterpay as an alternate payment method.

According to March 2019 data from Roy Morgan, 1.59 million Australians used one of the newer “buy-now-pay-later” digital payment methods, across all sectors.

Millennials were the highest users of such services, at 40.6%, with Generation Z next at 35.1%, and Generation X at 19.1%.

“The payment environment in Australia is facing rapid change as we see innovative new companies, such as Afterpay, changing the way people purchase goods that they may not be able to afford immediately,” Norman Morris, Roy Morgan Industry Communications Director said at the time.

“These ‘buy-now-pay-later’ companies are likely to pose a threat to traditional payment types such as credit cards as well as traditional financial institutions, as consumers can access a small amount of credit instantly with no documentation.”

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