How much does Afterpay charge merchants?

We’ve recently had to integrate Afterpay in to some of our clients’ Shopify stores and found during the process the same question kept coming up. How much does Afterpay charge the online shop? So we decided to investigate…

What Is Afterpay?

Afterpay is a new way for customers to shop online, especially if they want to buy products that they can’t quite afford yet. Repayments are spread evenly across fortnightly instalments, so the customer doesn’t feel the full financial pressure of a purchase in one go. The customer doesn’t pay any interest or charges (unless the payment is made late, then late fees apply).

The benefit for the merchant is they can use this service to offer repayment plans to customers, while still getting paid right away (they takes the risk).

So, What Does Afterpay Charge The Merchant?

How does Afterpay work, and how does it make money? The online shop is charged a flat fee of 30 cents and a commission that varies with the value and volume of transactions processed using Afterpay. The more you sell, at a higher value, the lower the percentage fee will be. The fee ranges from just over 6 percent per transaction down to 4 percent per transaction. While the charge is more than regular credit card fees, the benefits can possibly outweigh the additional cost.

They accept Mastercard and Visa credit and debit cards issued in Australia and work with Shopify, WooCommerce, Neto and Magento at this stage.

How Long Does It Take Afterpay To Pay The Merchant?

Afterpay usually takes up to 48 hours to pay the merchant.

Is Afterpay Worth It?

Afterpay is becoming more popular among customers, especially in the online fashion sector. As more online shops offer this service, the more customers are seeing this as a preferred payment option. If it is new to a customer, then they are encouraged to register with Afterpay from within the online shop. Once in the Afterpay eco-system the customer is then more aware of shops that offer this service and are more likely to make a purchase, and even spend more than they would’ve otherwise. It also reduces the fraud risk sometimes associated with credit cards being used in online shops.

Consider the price point of your product offering and customers’ purchase behaviour online. Would the customers have bought anyway, even if it wasn’t offered? Did you just give away that percentage for nothing?

The only real way to know how it will effect your individual store is to give it a try, and see if it lifts conversions, and raises the value of each transaction.

Integrate Afterpay With Shopify.

We have integrated Afterpay with online shops built on Shopify. If you need help with your Afterpay/Shopify integration, get in touch.