Afterpay

 

Afterpay is a Buy Now, Pay Later (BNPL) payment method founded in Australia in 2014 and now owned by Block Inc. (formerly Square). At checkout, customers choose Afterpay and split their purchase into four equal fortnightly instalments, interest-free. The merchant receives the full payment upfront, with Afterpay absorbing the consumer credit risk. For markets where extended repayment terms are offered, 6 and 12-month plans with applicable interest rates are available, though the core proposition is the four-instalment model.

In the UK, Afterpay operates under the Clearpay brand. Outside of these English-speaking markets, Afterpay has limited reach, making it primarily relevant for merchants with customer bases in Australia, New Zealand, the US, Canada, and the UK.

The merchant cost is significantly higher than standard card processing. Afterpay typically charges merchants in the range of 4 to 6% of transaction value plus a fixed fee per transaction, compared to the 1 to 2% range for card acquiring in most European markets. The commercial case for accepting Afterpay therefore depends on whether the conversion uplift and average order value increase it drives outweigh that cost. For merchants in relevant markets, this is a calculation worth doing properly rather than assuming the answer either way.

PSP support for Afterpay varies. Not all PSPs offer it natively, and where they do, the terms differ. If you are reviewing your payment method mix or renegotiating your PSP contract, Afterpay inclusion, pricing, and settlement terms are worth putting on the table.

Relevant markets: Australia, Canada, New Zealand, United Kingdom, United States