Pressure is mounting for buy now, pay later schemes to be regulated, with fears they're a 'ticking time bomb' for vulnerable people.
Services like Afterpay, Laybuy, and ZipPay are interest free with repayments staggered over several weeks and late fees if a payment is missed.
But according to research from the Ministry of Business, Innovation and Employment (MBIE), 90 percent of people using them have other debts and 20 percent have previously missed at least one payment.
Buy now pay later schemes were popular with shoppers in Tāmaki Makaurau.
"I do online shopping using Afterpay and I also use Openpay for my clothes, anything from the reject shop, PGW, Petbarn and Sketchers," said one woman.
But because the schemes do not charge interest like a credit card, they do not fall under the Credit Contracts and Consumer Finance Act.
Consumer NZ wants to see this regulated.
Head of communications and campaigns Gemma Rausmussen said the lack of credit assessment when making a purchase was concerning.
"No one is actually assessing to see whether customers can service the debt, so that means that vulnerable consumers, they may not be able to repay their debt, they could end up with a poor credit rating and things can escalate very quickly to a debt collector."
Rausmussen said often people do not see the schemes as banking products.
"When you walk into a store and you can download an app and have buy now pay later within a matter of minutes and you're also then provided a lot of marketing encouraging you to spend, the lines can be blurred and sometimes it can be harder to understand that you are actually very much taking on this debt."
The variety of products is expanding, with alcohol, parking fines and even holidays on the list.
According to Consumer NZ's latest research, people that used buy now pay later schemes and earned under $50,000 a year, were spending 50 percent of their purchases on essential items.
But Rausmussen said it was how they managed those purchases that caused issues.
"Another thing that our research did find is that about 28 percent of buy now pay later users are paying for their payments on a credit card. So it can mean that you have a double cycle of debt, you've got the interest from the credit card, then you're also running the risk of late payments."
There was a growing community of vulnerable people turning to these schemes - who may not have found themselves in this position a few years ago, she said.
With some limits going up as you make more purchases, it was easier to spend more, the research said.
One downtown Auckland shopper said it was important people were able to service payments.
"People get excited about the fact that they can Laybuy, but if you're not able to actually keep up with those payments, then you're putting yourself behind the eight ball, so I would always make sure that I've only got one transaction happening every week."
Another said: "Yeah, the more you purchase there's an increasing limit that you're able to buy, I do find that the more I spend it does go up."
Consumer NZ said retailers could feel disadvantaged if they did not offer the option. Shoppers could easily find that out-going payments were eating into their income.
Financial mentor Peter said he experienced that recently with one of his clients.
"She's got 16 current after pays, she's a beneficiary, she needs to find $630 a fortnight ...she can't afford it without sacrificing most of her general living expenses like rent and food."
Because she can not make those payments, $160 per fortnight in late fees are adding to her debt.
Peter urged people to use the service with caution.
"A warning for people that Afterpay is not simple, it's not like you can afford it and sort of almost forget about it."
In a statement, Minister of Consumer Affairs David Clark said he was concerned about Buy Now Pay Later scheme's potential to cause financial hardship.
In November last year MBIE officials consulted with consumers, businesses, and other interested parties to hear their experiences. Clark expected to make further announcements soon.