Everything you need to know about Afterpay

Changing the way you make payments, Afterpay is an online payments solution, which has changed the game for retail stores as well as customers. Making your lifestyle more convenient, it has become a big hit among those who reside in Australia and New Zealand.

On our blog this week, we take a look at all you need to know about Afterpay, from what it is to how it works. Read through for a thorough overview!

What is Afterpay?

Launched in 2015, Afterpay has been able to attract 2.2 million people to make transactions through their platform as of July 2018. It’s a simple alternative to conventional payment methods, which are most often cash or card-based. What’s special about Afterpay, however, is that it allows you to pay for your purchased products in four equal instalments, on a fortnightly basis. Ranging from clothes to accessories to pet care, Afterpay has been able to emerge as a game changer across many online shopping categories.

How it works

To explain how it operates, let’s take the example of James.

James is on a shopping spree for a new pair of jeans, a few pairs of shorts, and t-shirts. He shops at his favourite retail store and is given a bill of $148. James cannot afford to pay this amount up front, so he places the purchase order with Afterpay, which allows him to break his total into four instalments, with a payment due every fortnight.

Assuming James shopped on the 1st of February, his first payment of $37 is due on the 15th of February, the second on the 29th of February, and so on.

For sales over $500 or if you’re a first-time Afterpay user, you will have to make your first repayment at the time of the actual purchase.

Here’s something else you need to know - Afterpay charges late fees on missed payments. This means that if your payment isn’t processed on or before the due date, you will be charged around $10 extra. If you still haven’t made the payments, Afterpay charges a further $7 for the unpaid seven days from the due date. For unpaid orders less than $40, only $10 will be charged. Further, for purchases above $40, the late fees charged is capped at 25% of the value of the purchase or $48.

Apart from late fees, Afterpay doesn’t charge any other fees or interest.

Who can use Afterpay?

Since Afterpay isn’t regulated by the Australian Prudential Regulation Authority (APRA) - given that it’s  neither a bank nor a non-bank lender - you don’t need to be approved for an account like you would otherwise. The only criteria are that you must be 18 years of age and must have a credit or debit card to link to Afterpay.  

Key takeaways on everything you need to know about Afterpay