Afterpay is an Australian technology company that offers a "buy now, pay later" (BNPL) service, allowing consumers to make purchases in-store or online and pay them off in four interest-free installments spread over six weeks. At the time of purchase, the shopper pays approximately 25% of the total, and Afterpay pays the merchant in full upfront. The remaining payments are automatically deducted from the shopper's linked debit or credit card every two weeks. Afterpay does not charge interest or fees to consumers if payments are made on time but may impose late fees if payments are missed. It does not perform traditional credit checks but uses a proprietary risk model to approve transactions. Afterpay earns revenue by charging merchants fees for offering the service and late fees from consumers who miss payments.
How Afterpay Works:
- Afterpay lets you buy a product and take it home immediately.
- Payments are split into four equal installments over six weeks with no interest.
- The first payment (about 25%) is due at purchase.
- Subsequent payments are automatically deducted every two weeks.
- The service is widely accepted by many retailers both online and in physical stores.
- Late fees apply if payments are missed, but these are capped and non-compounding.
- Account usage and payment history can affect spending limits over time.
This model provides an alternative to credit cards by offering interest-free payment plans and encouraging responsible spending through controlled limits and payment schedules.