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The revolutionary financing service of Buy Now, Pay Later (BNPL) has taken the world by storm. And if you’re not living under a rock, you’re sure to have come across popular BNPL providers.
One such rising provider is the global platform Afterpay.
If you’ve been thinking of using Afterpay or creating an account, we’ve caught you at the right time!
Here are all the details you need to know about Afterpay before you go ahead and sign their terms.
In This Post:
- What Is Afterpay?
- Is Afterpay Legit?
- Is Afterpay Safe?
- Does Afterpay Check Credit?
- How Does Afterpay Make Money?
- Popular Online Stores That Accept Afterpay in the U.S., Australia & NZ
- 4 Reasons AfterPay Is A Game-Changer
- Everything You Want to Know About the Afterpay Card
- Afterpay Day Shopping Guide
- UK Online Shops That Accept Clearpay To Buy Now, Pay Later
What Is Afterpay?
Afterpay is a Popular Buy Now, Pay Later (BNPL) platform that offers users the opportunity to make purchases and pay them off over time.
It can be used for both online and in-store shopping and is accessible as an alternate payment option during checkout. When shoppers choose the Afterpay option, the transaction is instantly approved. They can then continue with their purchase.
Once the payment method is approved, customers have the option to accept the payment schedule and installment amount that Afterpay offers. At this stage, users can still cancel the service.
With Afterpay, shoppers can split their payments into four installments that are always zero interest. New users typically have to make the first payment at the time of purchase. Old users with good repayment history can defer payments until 2 weeks after purchase.
The biggest benefit of using Afterpay is that users do not have to pay additional fees on installments paid on schedule. The schedule is spread over six weeks and collected once every two weeks. Any late fees are capped at 25% of the total amount of your order.
Afterpay does not report payments to credit reporting agencies. This ensures your payment activity does not affect your credit score.
Is Afterpay Legit?
Yes. Afterpay is a legitimate company. That being said, make sure to pay your installments promptly. This will ensure you do not end up hurting your credit score and paying late fees.
Is Afterpay Safe?
Afterpay is safe. Here's why.
To ensure they keep users’ personal data safe, Afterpay ensures compliance with PCI DSS Level 1 requirements. This is the highest level of security requirements set forth by the Payment Card Industry Security Standards Council.
Afterpay stores, transmits, and processes your personal information and sensitive credit card data in line with the highest security standards.
Does Afterpay Check Credit?
Yes, Afterpay does check your credit and consumer reports from consumer reporting agencies when checking your eligibility for an Afterpay loan.
Afterpay claims these checks are soft credit checks that do not affect your credit score. However, these checks may or may not appear on your credit report based on the credit bureau.
Along with a soft credit pull, Afterpay considers the factors mentioned below when determining users’ eligibility.
- Value of order being placed
- Afterpay usage history (how long the user has used Afterpay)
- Sufficient funds (for the first installment) on the card being used
- Number of open orders with Afterpay
- Amount to be repaid
Based on all this information, Afterpay assigns users a spending limit. Several factors affect this limit. Some of them are:
- Frequency and occurrence of late payments
- The frequency of orders declined due to insufficient funds
- Frequency of declined scheduled payments
- The time taken to make delayed payments
How Does Afterpay Make Money?
Afterpay makes money by charging merchants and customers who use their service. However, the way they make money is not quite direct.
Instead of charging customers for using their service, Afterpay charges them a late fee when they default on their scheduled payments.
Afterpay also makes money through the merchants who partner with them. Partner merchants need to pay a small fee for all purchases completed through Afterpay. Merchants either pay a flat fee of $0.30 or 4 to 6 percent of the transaction value.
Want to know more about Afterpay (Clearpay in the UK)? Read our Guides to the Afterpay Card, Afterpay vs other BNPL Apps and more!
Kellie Walker
Tuesday 26th of April 2022
I am pleased with the opportunity of having high end merchandise with paying in installments. How is this process of paying accomodating to a 50 year old on a extremely strict budget?