Do you have an ecommerce website and wondering whether you need to add Afterpay as a payment option? This article will explain what Afterpay is, why your online store should offer Afterpay and the benefits of a BNPL payment option.
Before we dive into why e-commerce stores need Afterpay we want to explain the Buy Now Pay Later phenomenon. If you want to jump straight to the reasons why you need to add Afterpay as a payment option, feel free to navigate through our table of contents below.
What is Buy Now Pay Later (BNPL)?
Buy now pay later (BNPL) is a payment option that allows customers to purchase items and pay for them at a later date, typically with no interest or fees. This can be an attractive option for ecommerce stores because it can help to increase sales and customer satisfaction by making it easier for customers to make purchases.
Meet AfterPay – Australia’s own BNPL
Afterpay is a payment platform based in Australia that allows customers to make purchases and pay for them in instalments over time, without incurring interest or fees. The service was launched in 2015 and has quickly become a popular option for shoppers in Australia, particularly among younger consumers.
With Afterpay, customers can shop at participating retailers and make purchases as they normally would, except they don’t have to fork out the total amount of the order. Well that is, for the moment. At checkout, they can choose to pay with Afterpay and split their payment into four easy instalments. The first instalment is due at the time of purchase with the remaining three payments automatically deducted from the customer’s bank account every two weeks.
Afterpay has partnerships with a wide range of retailers in Australia, including major fashion and beauty brands, electronics stores, and sports retailers. This means that customers can use Afterpay to make purchases at many of their favourite stores.
One of the key benefits of Afterpay is that it allows customers to make purchases without having to pay for them upfront. This can be helpful for people who want to make a big purchase but don’t have the funds available at the time. With Afterpay, they can spread the cost of their purchase over several instalments and pay for it gradually.
Another advantage of Afterpay is that it doesn’t charge interest or fees on its instalments. This means that customers only pay for the items they purchase, with no additional costs. So long as they make the remaining payments as part of the payment schedule. This is in contrast to traditional forms of credit, such as credit cards, which can charge interest on card balances straight away.
Despite its popularity, Afterpay has faced some criticism. Some people have expressed concern that the service could encourage people to overspend and rack up debt. However, Afterpay has implemented measures to prevent this, such as limiting the amount that customers can spend and requiring them to have a good credit history.
Overall, Afterpay is a popular and convenient payment platform that has revolutionised the way many Australians shop. Its ability to allow customers to make purchases without the full upfront payment and without incurring interest or fees has made it a valuable tool for many shoppers. Consumers can you Afterpay for flights, bills, clothing and more! Heck, they can even use Afterpay for tattoos! As an added advantage, customers can search Afterpay near me option via the Afterpay website. There is a list of merchants available on their website. So if someone is searching for Afterpay Hairdressers they can access a list of hairdressers using Afterpay directly from the merchant list.
With that in mind and the popularity of the service, it makes the payment option a valuable addition to your online store. So, Afterpay for business is a great idea.
Benefits of adding Afterpay as a payment option
There are several benefits for businesses that choose to use Afterpay as a payment option for their customers. Some of these benefits include:
By offering Afterpay as a payment option, businesses can attract more customers and potentially increase their sales. This is because many consumers prefer to pay for their purchases in instalments rather than upfront, and having Afterpay as an option can make a business more appealing to these shoppers.
Improved customer satisfaction:
Offering Afterpay can also improve customer satisfaction by providing customers with more flexibility and control over their payments. This can help to build trust and loyalty between a business and its customers.
Reduced payment processing fees:
By using Afterpay, businesses can potentially reduce the fees they pay for payment processing. This is because Afterpay charges a flat fee per transaction, rather than a percentage-based fee like many other payment processors.
Increased customer lifetime value:
By offering Afterpay as a payment option, businesses can potentially increase the lifetime value of their customers. This is because customers who use Afterpay are more likely to make repeat purchases, and the instalments provided by Afterpay can make it easier for customers to afford larger purchases.
Improved cash flow:
Using Afterpay can also help businesses to improve their cash flow by receiving payment for their products or services upfront. This is because with Afterpay, businesses receive the first instalment of a customer’s payment at the time of purchase, rather than having to wait for the full payment to be made.
Easy to set up and use:
Afterpay is easy for businesses to set up and use, with no complex integration required. This means that businesses can start offering Afterpay as a payment option quickly and without any technical hurdles.
Wide range of participating retailers:
Afterpay has partnerships with a wide range of retailers in Australia, which means that customers can use Afterpay at many different businesses. This can be helpful for businesses that want to offer Afterpay as a payment option but are not sure if their customers will use it.
With Afterpay, businesses do not have to worry about chargebacks. This is because Afterpay handles all of the payment processing and customer verification, which means that businesses do not have to deal with any disputes or fraudulent transactions.
No fraud risk:
Because Afterpay handles all of the payment processing, businesses do not have to worry about fraud risk. This means that businesses can accept Afterpay payments without worrying about the potential risks associated with accepting credit card payments.
There are many benefits for businesses that choose to use Afterpay as a payment option. These benefits can help businesses to attract more customers, improve customer satisfaction, and increase their sales.
How much does Afterpay for Business cost?
Afterpay does not charge customers any interest or fees on their purchases. However, the company does charge businesses a fee for each transaction made using their service. This fee is a flat rate, which means that it does not vary based on the amount of the transaction.
The exact cost of Afterpay will depend on the specific terms of your contract with the company, as well as factors such as your average order value and the number of orders you process. However, in general, Afterpay charges a commission on each transaction, as well as a monthly fee for use of the platform.
According to Afterpay’s website, the commission charged on each transaction ranges from 4% to 6% of the total purchase price, depending on the merchant’s average order value.
*prices correct at time of publishing. It is important to note that these fees are in addition to any fees that may be charged by your payment processor or other third-party services. You should carefully consider these costs when deciding whether to offer Afterpay as a payment option for your business.
Buy Now Pay Later User Statistics
Are you on the fence about offering a BNPL option for your online store? Here are some interesting statistics about offering Afterpay on your ecommerce website.
Afterpay’s own website states that
“Without Afterpay, 57% of customers said that they would have looked for another store that did have Afterpay or not purchased at all.”Afterpay Australia
“In March 2021 polling by The Ascent, 45.0% of US adults who were BNPL users said they used these services to make purchases that otherwise wouldn’t fit into their budget.” 💸💸💸💸eMarketer
Now I don’t know about you but to me those statistics are screaming 📢
“YOU HAVE TO OFFER A BUY-NOW-PAY-LATER OPTION ON YOUR E-COMMERCE STORE!’Zel Designs
Check out these Afterpay statistics and forecasts from eMarketer
How to add Afterpay to your Website
How to add Afterpay to your Shopify Website
Looking to add Afterpay to your Shopify site? We don’t blame you! Offering this type of payment option helps sellers to create a convenient and easy shopping experience for their customers. Check out our quick how-to guide below!
To integrate Afterpay with a Shopify store, the first step you will need to complete is signing up for an Afterpay merchant account.
Before you set up this payment option on your Shopify website, you will need to make sure your site is configured in line with the prerequisites. Please check your Shopify settings to ensure these prerequisites are met.
#1 Your store address must correspond to the Afterpay account region.
Navigate to: Shopify Admin > Settings > General
Under ‘Store Address’, the ‘Country’ must be one of:
– 🇺🇸 United States
– 🇦🇺 Australia
– 🇳🇿 New Zealand
#2 Your store currency must correspond to the Afterpay account region.
Navigate to: Shopify Admin > Settings > General
Under ‘Standards and formats’, the ‘Currency’ must be one of:
– 🇺🇸 United States Dollars (USD)
– 🇦🇺 Australian Dollars (AUD)
– 🇳🇿 New Zealand Dollars (NZD)
#3 Your store must have ‘Automatically captured payments for order’ set.
Check if you have “Automatically capture payments for orders”
In the Payment Settings, a merchant may apply manual capture or automatically capture payments for all payment types. If you have enabled “Manually capture payment for orders” follow these instructions:
Once you have completed the merchant application and confirmed your website is ready to add Afterpay as a payment option, you can follow these steps to integrate Afterpay with your Shopify store:
Step 1: Set up Afterpay in Shopify Payments
Step 2: Connect Shopify to Afterpay
Click “Connect” to link your Afterpay account. Shopify will ask you to grant Afterpay permission to process orders & refunds. Click “Install app” to continue.
Step 4: Link Afterpay Merchant
In this step you will need to select the country of your Afterpay account and then verify your identity with email or Merchant credentials:
Email: Sign in with the email you used to complete the merchant application. A verification code will be emailed to you to confirm your identity.
Merchant Credentials: Click “Activate with Merchant ID and Secret Key” to connect your Afterpay account with your API credentials. These credentials would have been issued to you when you completed your account application.
Step 5: Activate Afterpay Payment Option
Once redirected back to your Shopify payment settings, click “Activate Afterpay (New)”.
DO NOT enable the test mode. This is not for live sites. This would require separate credentials. Advise your Afterpay Account Manager should test credentials be required.
Step 6: Check Afterpay activation was successful
Once you have completed the activation process successfully, Afterpay will be available in your list of payment options for your customers to use at checkout.
*If your Shopify theme is not showing Afterpay, you can troubleshoot via Shopify’s help guide – https://developers.afterpay.com/afterpay-online/v1/docs/shopify-aunz-afterpay-product-page-display
What makes Afterpay different to Banks and other financial institutions?
Afterpay is different from banks/financial institutions in several ways:
- Business model: Afterpay provides buy now, pay later services while banks provide traditional financial services such as savings accounts, loans, and credit cards.
- Eligibility criteria: Afterpay has a more lenient eligibility criteria compared to traditional banks and may offer services to individuals with low credit scores.
- Payment structure: Afterpay allows consumers to pay for their purchases in instalments, while banks typically require full payment at the time of purchase.
- Focus on retail: Afterpay focuses primarily on the retail sector, while banks offer a wider range of financial services to both individuals and businesses.
Adding Afterpay as a payment option for your ecommerce store can be a powerful tool for boosting your sales and customer satisfaction. Afterpay allows customers to make purchases and pay for them in installments, which can increase conversion rates and reduce cart abandonment. It also improves the customer experience by providing a more flexible and convenient payment option. Additionally, Afterpay can increase repeat customers by encouraging them to come back and make additional purchases. Overall, it is a great way to stand out in a crowded market and attract more customers to your ecommerce store.
So the question remains, will you add Afterpay as a payment option or will you continue to without it? We strongly recommend the payment option for ecommerce stores.
Not sure how to proceed? Contact us to discuss how we can add Afterpay as a payment option to your Shopify website.
FAQ about offering Afterpay as a business
How does it work?
Customers can choose Afterpay as a payment option at checkout and pay their purchase in four instalments, due every two weeks. As long as the first instalment is paid on time, the customer will be able to complete their purchase.
Is there a fee for using Afterpay?
Afterpay charges businesses a merchant fee for each transaction, which is a percentage of the total purchase amount. This fee varies depending on the transaction amount and the country.
How does Afterpay affect my cash flow?
Afterpay does not affect your cash flow as payments are made to you in full, upfront.
Do I need to sign up for an account to start using Afterpay?
Yes, businesses need to sign up for an account with Afterpay and go through the application process in order to start accepting Afterpay as a payment option on their ecommerce website.
Is there a limit on the purchase amount for Afterpay transactions?
Afterpay sets a limit on the purchase amount for each transaction depending on the country. Businesses can check these limits on Afterpay’s website.
How does Afterpay help to increase sales?
Afterpay can help increase sales by providing customers with a flexible payment option that allows them to make purchases that they may not have been able to afford otherwise.
Can I offer Afterpay as a payment option in-store?
Yes, businesses can offer Afterpay as a payment option in-store by using the Afterpay In-store QR code or the Afterpay terminal.