No more money in the bank account, but still in the mood for a drink? Almost all major Dutch online liquor stores now work together with ‘buy now pay later ‘app (bnpl), such as Klarna or Riverty. This allows you to order alcohol online which only needs to be paid for two weeks to two months later.
The postponement of payment encourages consumers to order more alcohol than expected, prevention organizations such as the Trimbos Institute and the Alcohol Prevention Foundation (STAP) told RTL Nieuws. They are surprised, because last year the alcohol law was changed to include stricter rules that prohibit price promotions and high discounts on alcoholic beverages. According to the cabinet, this should prevent people from buying more alcohol than expected.
Extra cost
Market leader Gall & Gall, part of the Ahold Delhaize group, collaborates online with financial services provider Klarna. This company pays the bill on behalf of the customer, Gall & Gall then has the order delivered to their home. The customer has thirty to sixty days to pay the bill to Klarna, which charges 1.95 euros for this.
If payment is not made after several reminders, Klarna charges the fine from € 7.50 to € 13.50 and the costs may eventually rise up to 15% of the purchase value.
Wijnvoordeel.nl, which uses the Riverty bnpl app, does not charge any fees upfront for deferred payment. But as soon as a customer defaults on Riverty and doesn’t pay on time, collection fees follow with as little as 40 euros.
Drankgigant.nl, in its own words “the largest online liquor store”, and competitors such as Grapedistrict.nl, Drankstunter.nl, Topdrinks.nl and Neleman.org also partner with Klarna or Riverty.
Experts have long warned against deferred payments, because these apps blur the line between a purchase and a loan. Online shopping is no longer like spending money and that can get vulnerable groups into trouble.
Price incentive
Especially with an addictive substance like alcohol, lending is an even worse idea, says Carmen Voogt, an alcohol policy researcher at the Trimbos Institute. Because with an addictive product like alcohol, payment is a crucial time.
“Late payment makes buying alcohol more attractive because you are no longer held back by the price,” says Voogt. “Although we know from research that the price incentive is actually a deciding factor in deciding whether or not someone buys alcohol and how much.”
debt
Addiction health institute Jellinek fears these apps could cause financial misery. “This can also lead to excessive users getting into debt and running into financial problems,” says prevention manager Floor van Bakkum.
Popular
In the first half of 2022, 3% of all Dutch online transactions were paid via the bnpl app; this is a 47% increase compared to 2021, according to data from the research agency GFK. This makes “deferred payment” the biggest growth among online payment methods. Apple Pay and Paypal will also offer this payment method.
It’s not known how many transactions online liquor stores handle each year via bnpl apps, even Klarna and Riverty don’t want to say that. A 2020 study by Ecorys states that 17.8% of adults in the Netherlands have purchased alcohol online.
The price is decisive
Wim van Dalen, director of STAP Alcohol Prevention, also finds it irresponsible for liquor stores to offer alcohol on credit. “Apparently, licensees don’t understand how their product is marketed,” he says. “If you want to do something about alcohol, price is the key.”
Precisely for this reason, the Alcohol Act has all kinds of restrictions, such as a ban on high discounts and restrictions on alcohol advertising. The National Prevention Agreement even proposes the introduction of a minimum price for alcoholic beverages.
Party
Alcohol in installments counteracts this ambition, says Van Dalen. “It is legal from a legal point of view, but the deferred payment goes directly against the spirit of the alcohol law.”
But according to Marc Poppe of Drankgigant.nl, customers who use deferred payments are usually not inveterate alcoholics. “We see that people find deferred payment very useful when hosting a drink or party. They can then return any purchases that have not been drunk and then pay through Riverty only for what has actually been consumed.”
Buy now pay later
Deferred payment became very popular during the crown pandemic, particularly in online clothing stores. The best known provider is the Swedish Klarna. Riverty, formerly known as AfterPay, is part of the Bertelsmann Group, which also owns the RTL Group.
At the time of purchase, Klarna and Riverty check very quickly if the customer is having payment problems. They then advance the purchase amount and assume the risk of non-payment from the web shop. Plus, no application process, card number or subscription is required upfront – an important difference with credit cards. Furthermore, the bnpl apps do not charge interest in the first period, so transactions are not subject to the obligation to report to the Credit Registration Office (BKR), an institution that monitors the accumulation of problematic debts.
In conversation
Klarna denies that alcohol purchasing behavior is affected by deferred payment. “Consumers have been paying for alcohol for decades with credit cards or other forms of credit. Klarna is a new alternative, but it doesn’t affect consumers’ shopping behavior in any way.” 99 percent of customers who use Klarna pay the amount due on time, the company says.
Riverty also disagrees with the criticism and claims that every online payment method ultimately has the same effect. “If consumers can no longer meet their payment obligations, the purchase of new products is limited or even made impossible.”
However, Gall & Gall says in response to questions from RTL Nieuws that they would like to know more about the objections prevention organizations have against deferred payment for online alcohol sales. Online stores are now obliged to offer a payment method where customers only pay at least half of the invoice on delivery. Gall & Gall respects this deferred payment through Klarna, according to a spokesperson.
An alternative is negotiable for Gall & Gall. “We see this being used by a very small, mostly elderly customer group. We are happy to speak to the authorities and are ready to see if an alternative payment method is more suitable.”
Undesirable
Wijnvoordeel.nl states that “almost all transactions” are done through iDeal. “So there are hardly any buy now pay later-orders, “says manager Bart Kuppens. According to him, the online store will continue to pay later, because consumers expect it from the company.
But Carmen Voogt (Trimbos) believes online liquor stores should take responsibility. Vulnerable groups, such as young people and people with addictions, need to be protected, she says. “The price determines how much alcohol they can buy, but if you remove the payment incentive, you could start consuming more alcohol and that’s undesirable.”
