Afterpay – what’s the deal?
We’ve just added Afterpay as a payment option for O2wear. What is afterpay you may ask? Well essentially it allows you to make a purchase and receive the items immediately, as you normally would with an online purchase, however payment is spread over four equal instalments. It’s kind of like layby but you get the product immediately.
It’s now just another payment option available at checkout on our website, along with credit card and Paypal. When you select Afterpay you can sign in to your account or signup at the time of payment to start using it. The instalments will be calculated at the time of purchase and will be spread across 4 equal instalments due every 2 weeks. Sometimes the first instalment will be due at the time of purchase, Afterpay determines this and you’ll see the options at checkout.
When you sign up with Afterpay you nominate a credit card that the instalments are automatically charged to every 2 weeks. There is no additional cost for you to use it from the merchant (me) or Afterpay. So once you complete your purchase on the website using Afterpay, I’ll post out your order as normal and you will see an instalment appear on your credit card statement every 2 weeks, and there’s nothing more you need to do.
*Though you do need to make sure there is nothing preventing the auto payments being processed against your card (like an expired or maxed out card), otherwise you may incur fees.
So what is the incentive for merchants and businesses like me? Apparently it increases the average value of shopping baskets, which sounds good to me! I’ve also implemented it because it seems to be the new ‘thing’, every online store is offering it so I’m sure it won’t be long before customers come to expect it as an option, just like paypal. The other advantage for me and the reason small retailers are happy to jump on board is that there is no risk for us. We get full payment for the goods we ship you at the time of your purchase. Afterpay bear the risk of a customer defaulting and not paying all the instalments.
So if you’re wondering how Afterpay actually make any money by offering this service, the answer is we (merchants) pay for the pleasure of offering it! I pay Afterpay 6% +30c on each transaction processed using afterpay (I imagine bigger businesses get a better deal). It’s a bit more than what I pay for Visa/Mastercard/Paypal fees but I guess it’s just another cost of doing business!
Have you used it yet shopping online, how did you find it? I've just signed up for my own personal account but haven't made my first purchase yet, seems like a good option though, especially when you need to make a big purchase.
If you want more details you can get more answers from their website www.afterpay.com.au