Afterpay review: interest-free payments on online purchases

You might have already seen Afterpay as a payment option in stores and online. If you haven’t, you probably will soon. Afterpay is simple. When you buy something, simply select Afterpay as your payment method. Then you’ll have several weeks to pay the amount back in four installments, at no extra cost.

It’s already fully integrated in a number of stores so that you can buy now and pay later without paying a cent more than the price of whatever you’re buying.

How does Afterpay work?

You can start shopping with Afterpay by simply signing up and linking your debit or credit card. There’s no paperwork or complicated approvals process. All you have to do is sign up and confirm your details and you’re good to go. Simply select Afterpay as your payment option at checkout.

At the time of purchase, you’ll need to pay the first quarter of the total amount, with the remaining three quarters paid back every two weeks after that. You’ll receive reminders before payments are due and they’ll be processed automatically when the time comes so that you don’t have to worry about it.

In order to make sure the service is free to use for everyone, the amount you can spend at any one time is subject to approval. Approval is based on a variety of factors, including the number of unpaid Afterpay accounts you have and your history paying off your Afterpay accounts.

See the full Afterpay store list here

Features of shopping with Afterpay

How much does Afterpay cost?

Afterpay is a free service. There are only two costs involved and one of them is the cost of the item you’re buying. The other is a late fee for missed installments.

If a payment is unsuccessful, you will be notified and you will have a chance to log in and choose a different payment method. If you don’t pay by 11 PM EST the next day, you’ll be charged an $8 late fee. If you fail to make a payment within seven days you’ll be charged another $8 fee. Late fees are capped at $8 or 25% of the purchase value, whichever is less. You can also change payment methods at any time, or even have multiple payment options to make sure you’re always able to keep up and keep using the Afterpay service.

If you fail to make repayments, Afterpay could report it to a credit reporting bureau, which may affect your credit score.

How to sign up for Afterpay

In order to sign up you have to:

• Be at least 18 years old and capable of entering into a legally binding contract (19 in the state of Alabama)
• Have a valid and verifiable email address and mobile number
• Have a credit or debit card

And that’s it! Afterpay is not a store credit application. You don’t have to sign anything or fill out an application form. All you have to do make sure you’ve read the details, signed up online and you’re good to go.

Have more questions about Afterpay?

• How does Afterpay make money?

  Afterpay doesn’t charge customers to use its service. Instead, it makes money by charging retailers fees for offering the service. It also makes some money by charging customers late fees.

• Is it really interest-free?

  Afterpay’s platform will not charge you interest. However, if you use a credit card as your payment method then you can be charged interest on that credit card. Interest-free periods on credit cards are usually one month if you have paid your previous statement period’s balance in full, while Afterpay offers a slightly longer repayment term. Check the interest-free period on your credit card and aim to repay it within that time frame if you really don’t want to be charged interest with Afterpay.

• Can I get a refund on an item I've purchased with Afterpay?

  Yes, full and partial refunds are available. Keep in mind you may be charged for the item by Afterpay if the refund has not been processed by the retailer yet. However, you will be refunded for any payments. To find out about your refund, contact the retailer. Afterpay must be notified when your return has been received.

• How do I know how much I have to spend each time I make a purchase with Afterpay?

  Unfortunately, you don’t. Afterpay uses an automated system to approve you for an amount on a purchase-by-purchase basis. According to Afterpay, the longer you’ve held an account and the more purchases you successfully repay, the more likely you are to be approved for a higher amount.

Elizabeth Barry

Elizabeth Barry is Finder's global fintech editor. She has written about finance for over five years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at The Lizzies. Elizabeth has found writing about innovations in financial services to be her passion (which has surprised no one more than herself).