top of page
  • Writer's pictureDonnelle Brooks

Everything You Need To Know About Zip Pay: A review

Updated: Jul 26, 2023

Are you considering opening a Zip Pay account? You are not alone! Buy Now Pay Later services continue to rise in popularity as consumers shy away form traditional credit cards. Do you want to know a little bit more before you take the plunge? You've come to the right place! Here you will find everything you need to know about the Buy Now Pay Later giant!

Is Zip Pay better than Afterpay?

This is probably the question you are really wondering. We have an indepth article about this here, but we'll give you the cliff notes. Let's start with the most important aspect - fees.

As you can see, the biggest difference between Afterpay and Zip Pay is how they make their money. The grey bar represents consumer fees, which is how Zip Pay makes most of it's money. The red bar represents missed payment revenue, which Afterpay has a lot more of. Finally, the blue bar represents merchant fees. They are the fees that the business has to pay whenever you buy something with Afterpay or Zip Pay.

So what can we tell from this? Zip Pay is cheaper for merchants but more expensive for customers. But Afterpay does a little dance every time you miss a payment. If you are trying to choose between the two services, make sure you read this our review of the different Buy Now Pay later services for more information.


What is Zip Pay?

Zip Pay is a Buy Now Pay Later service. That means when you buy something, the cost gets added to your account, and you pay it back in instalments. It's a little bit like the traditional Layby, except you get to take your purchase home with you.

It was founded in 2013 by Larry Diamond as Zipmoney. They originally offered digital credit options up to $10000, similar to a personal loan but completely online. Soon after they launch Zip Pay to compete with Afterpay.

According to Business Insider, Zip Pay now has nearly two million Australian users, which is 30% of the Buy Now Pay Later market. The thing that sets

How does Zip Pay work?

To start using Zip Pay you sign up for an account. You can choose Zip Pay, that has a limit of $1000, or Zip Money, for purchases over $1000. You then put in your mobile number and will be asked for a verification code. After that you put in some personal details and verify your identity using your bank, Paypal or Facebook. To start using Zip Pay you must be linked to a debit or credit card.

When you are ready to make a purchase using Zip Pay you choose it as your payment method as you would a credit card. The balance then gets added to your account and paid off with direct debits.

What is the minimum repayment for Zip Pay?

The minimum repayment is $40 per month, or $80 if your credit limit is $1500. You can also choose to pay off more, similar to a credit card. If you pay off you balance before the due date, they will waive the $6 service fee, so it's always a good idea to keep your balance down to minimise fees.

When is the due date for Zip Pay payments?

To minimise account fees, Zip Pay encourages you to pay off the balance before the "due date". If you do this, they will waive the $6 monthly account fee. But how do they calculate the due date?

The due date is the end of the month after you make your purchase. Huh? For example, if you make two purchases in February, you will be sent on account statement on the last day of February. You due date will then be the last day of March. If you then make 2 purchases in March, the due date for those purchases will be the end of April. It's similar to the 44 day interest free option that credit cards offer.

What is the Credit limit for Zip Pay?

The credit limit is from $350 to $1000 for Zip Pay, although you can be approved for up to $1500. If you want to make bigger purchases, you can apply for Zip Money. The credit limit for Zip Money is $5000, although you can apply for more on a case by case basis.

What is the difference between Zip Pay and Zip Money?

Zip Pay and Zip Money are very similar products. The main difference is the credit limit. Both have a minimum repayment amount of $40 per month, and can be used as a type of revolving credit, similar to a credit card. The main difference is Zip Money allows a higher credit limit, and Zip Money charges interest. Zip Money does have an interest free period of at least 3 months, and up to 36 months depending on where you make your purchases. But be careful, the interest rates can be up to 20%, meaning you may as well be using a credit card!

Is Zip Pay safe?

Zip Pay and other Buy Now Pay Later services are considered more secure than using your own debit card. This is because you are not entering your details directly onto a site each time you make a purchase. So instead of say, 10 sites having your card details, only Zip Pay does.

They also have a dedicated fraud team to keep information secure. It is in their best interest to avoid data breaches, so in terms of online security, your data is pretty safe.

tiny cute shopping cart with small boxes on a pink background
Buy Now Pay Later Services are a secure way to pay online

Does Zip Pay charge interest?

Zip Pay is an interest free service. Most Buy Now Pay Later services are. They do however have a monthly service fee of $6, which on a balance of $1000 is equivalent to 7.2% interest per annum. This however is only charged if you have an outstanding balance.

Zip Money is another matter. They have a default interest free period of 3 months, and after that will charge up to 20% interest, so be careful and don't confuse the two.

What does Zip Pay Cost?

This is the most important question! Let's do a breakdown of the fees involved with Zip Pay

Account establishment fee: $25 One off fee (This depends on the credit limit)

Account Keeping fee: $6/month (if there is an outstanding balance)

Late Fee: $5 (charged if you miss a payment or don't pay the minimum)

Dishonour Fee: $15 (if direct debit rejected)

Does Zip Pay credit check?

In short, yes. They say on their website "When you apply for a Zip account, we may need to perform identity and/or credit checks to verify your details and confirm you can make repayments."

So when you are applying for a Zip Pay account, keep in mind that you are consenting to a credit check and they are within their rights to conduct one.

Will Zip Pay affect my credit score?

Anytime you apply for a line of credit, a hard inquiry will appear on your credit file. This will cause your credit score goes down temporarily by a small amount. So again, in short, yes. They can also put a negative report on your credit report if you default or refuse to pay.

If you use Zip Pay responsibly it will not affect your credit score greatly. If you use it a lot, lenders can see that on your bank statement and may wonder about your creditworthiness. What's creditworthiness? Check out our article.

Does Zip Pay build credit?

This is a tricky one. If a lender can see that you use Zip Pay responsibly and can consistently meet your repayments, then they may be more likely to give you a loan. However, it is not likely to build your credit score. This is because it is not a loan or a credit card. Sorry for the bad news.

What stores accept Zip Pay?

Zip Pay is accepted in most major stores. You can also use it on Ebay, Amazon and to pay some bills. Zip Pay is compatible with BPAY but you may not be able to use it for things like your car registration, rent and credit card bills. I'd advise you check first before applying for an account to pay your rego.

podium displaying zip pay sign
Zip Pay is accepted at most major stores

How does Zip Pay make money?

As we discussed earlier in this article, Zip Pay makes most of it's fees from you, the consumer. It has considerably lower merchant fees than Afterpay, meaning it charges stores less to use their payment method. Unfortunately, it means you are paying more.

However, they make a lot less percentage of their fees from late payment fees, just 1% compared to Afterpay who make 20% of their money from late fees. So you have to decide which is worth it? Lower upfront fees, or more fair late payment fees.

How To Use Zip Pay

To use Zip Pay, you select it as your payment method when making a purchase. It is very similar to using Paypal. When making a payment in store, choose Zip Pay as your payment method at the checkout. You will then log into your account, and the app will generate a 6 digit code for you. You can share this with the cashier, or alternatively they can scan a barcode from your screen. You must have a mobile phone to complete this process.

Is Zip Pay worth it?

That really is up to you as a consumer. Personally, I don't favour revolving lines of credit. I think they encourage you to overspend. I think a better strategy is to build a savings account for larger purchases. This makes sure you are not spending money you don't have. However, is saying that, if you want to use a Buy Now Pay Later service, Zip Pay is not bad. As long as you have your balance paid off each month the fees are barely there. If you can wiggle out of paying the establishment fee - even better!

Cancellations, refunds and disputes

This is where the Buy Now Pay Later Services fall down. Refunding a purchase has to be done with the original retailer that you bought the goods from. Your Zip Account will then be credited IF they accept the refund. If the refund outs your account into credit you can get the balance transferred to your bank account. But you must contact customer service to arrange this.

The Bottom Line

More and more people, especially younger people, are abandoning Credit Cards. Buy Now Pay later services have filled that vacuum in the market. According to market research group Roy Morgan, 56% of BNPL users are under 35. Comparatively, that age group makes up just 21% of the population. So it looks like Zip Pay and Afterpay are here to stay.

Overall, I think that these services are better than a credit card, but still not better than using your own money. If you want some strategies to start building a savings account, check out our article for some helpful tips.

The key to a stress free life is good management. Don't believe me? Think about the last time your bank balance was less than $50. I don't know about you, but my palms are sweating already!

253 views0 comments


bottom of page