Afterpay

Afterpay is a buy now pay later service letting shoppers split purchases into instalments with no interest, offered through an app carrying deals and brand round-ups, a browser extension and in-store payment, with a separate Afterpay for Business route for retailers.

Charging the retailer rather than the shopper is the mechanism the whole category rests on and it is worth stating plainly, because a shopper reasonably asks how an interest-free loan makes money. The merchant pays a fee well above card processing, and accepts it because instalment options measurably raise conversion and average order value.

The app being a shopping destination rather than a payment tool is Afterpay's real strategic asset, since a customer who opens it to browse deals arrives at a retailer through Afterpay, which turns the provider from a checkout option into a demand channel the retailer is paying for twice over.

What a shopper should weigh is that missed payments carry late fees and the ease of splitting a purchase is precisely what makes overcommitting easy, which is why this category attracts regulatory attention in most markets it operates in. Afterpay states its app has over 700,000 five-star reviews. Merchant rates are not published.