Afterpay charges retailers 30 cents in addition to a commission of 4 to 6 percent depending on the bulk of purchases.
The 21st century has seen the proliferation of a number of novel financial services.
With the advent of digital technology, the way society is operating has been shaped in novel ways.
The financial sector and economy at large have not been left behind by this wave. As the world is getting more and more interconnected by the internet, service providers are coming up with new inventions that are focused on making life better and filling new niches.
So to say, making money in novel ways. Afterpay is a relatively new company that is spreading its tentacles across the world from its origin in Australia.
Afterpay is an Australian Buy Now Pay Later company that allows shoppers to buy products and pay for them after some time.
Buying now and paying later is a way to get the things you want but cannot pay for them at that particular time.
You are given the items and after a specified period of time, you repay the debt. The company works with a number of retailers that accept it as a payment option.
The company has now made its seventh year in existence as of 2022. Afterpay has to a large extent been embraced mostly by millennials, because many of them buy on impulse and sometimes do not have enough money to cover all the expenses they want to make at a particular time.
Afterpay offers these interest-free loans to shoppers and makes repayment easy by allowing payment in four instalments.
Afterpay operates in a number of countries across the world which include the United States of America, Australia, United Kingdom, Canada, France, Spain and Italy.
In the European Union, Afterpay is called Clearpay. The company was founded in 2014 and launched into existence in 2015 in Sydney, Australia.
Afterpay was founded by Nick Monlar and Anthony Eisen. Afterpay enables people to get what they need and pay later without being charged interest or any fees especially when they pay on or in time.
When payment is delayed, Afterpay charges fees for the delay.
You may be asking yourself; “How does Afterpay gain from offering interest-free loans to shoppers?”
Basically, Afterpay gets its income mainly from merchants. This is in form of a base fee and commission.
Shoppers thus enjoy this benefit almost free of charge. Only that you have to make sure that you pay in time to avoid being charged fees for the delay and losing your credit limit or having it lowered by the algorithm so that next time you want to get the purchase loan, the amount you are allowed is lower.
Afterpay payments are split into instalments. This is aimed at making it easier for the shopper to repay their Afterpay debt.
This works for both online and in-store purchases. Afterpay is an accepted payment option in certain stores in the countries where it operates.
It is easy to create an account on Afterpay as long as you are in a country where the service operates.
You can sign up on the Afterpay website or download and use their app.
On the Afterpay website or app, you find various businesses working in collaboration with Afterpay marketing their products.
The reviews on these products can be of help to you in making your purchase decision. If you are looking for product recommendations, the Afterpay website can be instrumental in your search. By tapping on ‘shop now' for a particular product, you can access the product description, delivery schedule, price and the product reviews.
Afterpay website and app works as a linkage that connects you to the retailers. Through the website, you can connect to the retailer's website.
Therefore, Afterpay is also in a way a form of affiliate marketer that you can sign up with for your business to get more customers and additionally have your customers enjoy the benefit of purchasing from you and paying later.
By including Afterpay among their payment options, businesses can capture a bigger segment of their market compared to their competitors with a limited number of payment options.
In fact, Afterpay is a form of lending to customers, only that in this case, you are assured that your money will be repaid within a particular time.
This arrangement does the work of demanding for clearance of debts from customers without you having to stress over directly telling customers to repay.
For your customers who ‘love' taking credit, you can happily recommend that they use Afterpay as a payment alternative.
Afterpay as a service has its pros and cons. Whereas some people find Afterpay to be amazing payment alternative, others consider it a not-so-good means to rely on.
Advantages of using Afterpay
a) Ability to buy
Afterpay gives you ability to purchase what you want even when you do not have enough cash on you.
All you have to do when you are in need of a particular item from a store that allows Afterpay is to walk in or order for the item online and select Afterpay as the payment option.
Unlike the conventional lending companies, you do not need to do any paperwork or pay a loan processing fee.
As long as you are eligible for their service, Afterpay is readily available and easy to use. You can decide to buy what you want and then pay later.
This can be very helpful in times when you do not have enough money or are living on a fixed budget yet you are in dire need of the product. Afterpay can be a good backup plan.
b) Marketing for merchants
By partnering with Afterpay, you can get market for your products through your products being featured on the Afterpay page having recommended products.
This enables you reach more customers who can become repeat clients in the long run.
b) Payment alternative
In addition to the flexibility provided by Afterpay to customers for payments, Afterpay is a payment option in itself. A customer can opt to using it at any times as long as it is the convenient option for them.
The Disadvantages of Using Afterpay
a) Impulsive Purchases
Afterpay powers impulsive purchases. Impulsive buying or buying on impulse when someone purchases goods basing on their spontaneous feelings that are pushing them to buy at that time.
Impulsive buying can be financially detrimental because it either leaves you broke or in debts.
The feeling of not having to pay immediately can make you even to buy things that you otherwise would not buy under normal circumstances.
It is not a good idea to spend more than you have. It is more advisable to take a debt when your goal is investment but not consumption.
b) Poor Planning
In relation to buying on impulse, the option Afterpay can make someone to fail to plan their expenses.
Financial management is key to success. If someone's spending is centred on spontaneity then they may be headed for a financial disaster.
On the outlook, it is a good opportunity but if mishandled, one may learn bad financial habits.
It may even lead to laziness in some people who, instead of working, may bank on Afterpay to afford what they want, yet this is like an illusion since one has to repay later.
Many people dread debt. The debt could lead to problems of anxiety. It is better in most cases to spend within your means rather than going on a spending spree whereby you have to pay later on.
Owing to the fact that tomorrow is unpredictable, miscellaneous expenses can come up and one is not in position to repay their Afterpay debt.
Therefore, it is more advisable to limit on the amount you accumulate in Afterpay debt by carefully spending on only the necessary items, leaving out those which are not so important.
By getting used to free excessive spending, you may accumulate a large debt such that when you get your pay check or whatever money you use it to clear debt instead of using it for something productive.
You may be left without any money on you, prompting you to take up more debts and the cycle continues.
Afterpay is good, but within limits. If it gets excessive, it can be hard to manage the debts, some of which may be for purchases that were made extravagantly.
d) Late Payment Fees
When your deadline for paying the debt reaches and passes without you repaying it on Afterpay, you have to pay a certain specified amount of money due to the delay.
e) You cannot choose when to repay.
Afterpay does not allow you to choose the day when you can repay your debt. The company actually chooses for you.
If you are not certain that you will receive money by the time your deadline reaches, then you are at a risk of being stressed.
Afterpay is best suitable when you have a steady and sure flow of income.