A Consumer NZ survey has found buy-now, pay-later services are costing shoppers more than $10 million a year in late fees.

Close to four out of 10 Kiwi consumers use buy-now, pay-later services, such as Afterpay, Laybuy and Zip.

Consumer NZ chief executive Jon Duffy says the payment option was heavily promoted with companies keen to emphasise it was interest-free. However, customers who couldn't make repayments on time were charged late fees.

'Our survey found 14 per cent of consumers had been stung with late fees,” says Jon.

'Based on the amount charged, we estimate late fees are likely to add up to more than $10m a year.”

Consumer NZ's survey found buy-now, pay-later was particularly appealing to younger shoppers. Those aged 18 to 29 were more likely to be regular users, with clothing and footwear the top purchases.

However, close to one in five consumers were using the services to pay for essentials, such as groceries and car repairs.

Buy-now, pay-later customers aged 35 to 44 and single parents were more likely to have done so. They were also more likely to have incurred late fees.

About half, 55 per cent, of buy-now, pay-later customers say the payment option had also encouraged them to make purchases they would not otherwise have made.

Consumer NZ is calling for buy-now, pay-later services to be regulated under the Credit Contracts and Consumer Finance Act.

'Unlike other lenders, buy-now, pay-later companies aren't covered by the act,” says Jon.

'That means there's no legal obligation on them to ensure their lending is responsible and suitable for their customers.”

Buy-now, pay-later customers also didn't have a right to a cooling-off period.

'With other products bought on credit, you get a cooling-off period where you can cancel if you change your mind about the purchase,” Jon explains.

'But that's not the case with buy-now, pay-later.”

Regulation of buy-no, pay-later services is also backed by FinCap, The Salvation Army, Christians Against Poverty and Debtfix.