Recently Afterpay has acted as a transformative way to change the way consumers shop by offering a simple “buy-now-pay-later” option. This service allows customers to split their payments on purchases, immediate full payment becoming a thing of the past. Let’s look at the history, functionality and safety of Afterpay as well as offering guidance on how to use it.
History
Afterpay is an Australian financial technology company that was founded in 2014 by Nick Molnar and Anthony Eisen. Their core idea centred around allowing consumers to make purchases upfront while spilling payments into installments for the future. Becoming popular in Australia initially, Afterpay expanded onto the global market, becoming available in the United States, Canada and Europe. In 2021, the company was acquired by Square Inc (now Block Inc).
What is Afterpay?
Afterpay is a buy-now-pay-later service which allows customers to pay for purchases upfront but pay the remaining balance in installments later. Users split the cost of a purchase into four equal, interest-free payments and pay every two weeks. With no credit checks or upfront fees for on-time payments, Afterpay has become a popular choice for consumers.
How Does Afterpay Work?
The process of using Afterpay is streamlined to ensure that customers can use it easily.
- Firstly, you choose Afterpay as a payment option at checkout.
- Afterpay then performs a quick eligibility check (without any hard credit inquiries)
- You pay the first installment of 25% of the total.
- The remaining three installments are paid every two weeks from the time of initial purchase.
Once payments are paid on time, there are no additional interest charges or fees.
Business model
Afterpay makes its revenues through two sources: merchant fees and late fees. The merchant fees are paid by retailers. This is between 4-6% of each sale. In return, merchants gain increased customer traffic and higher conversion rates. Customers who miss payments may have to pay late fees but these are capped to prevent excessive penalties.
Is Afterpay Safe?
Yes, Afterpay is safe to use as it does not involve hard credit checks and payment information is encrypted. However, users should act responsibly so as to avoid late fees. Afterpay does not act as a traditional lender and won’t report on-time payments to credit bureaus.
How do I use Afterpay in-store?
Afterpay can be used in-store as well as online.
- Firstly, download the Afterpay app, create an account and link a payment method.
- Then, select the retailer you’re shopping from and generate a unique barcode for the transaction.
- Present this barcode to the cashier who will scan it and apply it to your purchase
- Complete the payment in-store. Now, future installments are handled through Afterpay as it would for an online purchase.
FAQs
What are the requirements to use Afterpay?
You must be at least 18 years old, hold a valid debit or credit card, provide a verifiable email address and phone number and finally, reside in a country where Afterpay operates. Once you can meet these conditions, you can use Afterpay.
How do repayments work at Afterpay?
Repayments work automatically and are fortnightly. The first installment occurs at the time of purchase and is due then. You can make early payments without penalties and reminders are sent before each due date. Late repayments may result in fees.
How are Afterpay returns & refunds processed?
Purchases can be returned and refunded through Afterpay. If you return an item to the retailer, Afterpay will adjust your payment schedule or refund any paid installments. Refunds are credited to the original payment method. Afterpay automatically cancels outstanding payments or issues a refund for amounts already paid.
Afterpay has become a convenient and flexible option for shoppers across the world. Purchases are now more accessible without the need for traditional credit. Focussing on transparency and responsible spending, Afterpay has become a top option for customers and has made the shopping experience even easier.