Product Review

REVIEW: Afterpay, better than a credit card, or worse?

Afterpay is the latest payment option for consumers to use instore and online.

Afterpay’s motto is, Shop Now. Enjoy Now. Pay Later. In Four Simple Instalments, but is it really that simple and more importantly how will this impact your spending habits and personal budget?


This is NOT a product endorsement or recommendation to use the product, this blog is operational review based on the facts that are available at the time of writing, with a clearly disclosed opinion considering how Afterpay compares with using a credit card to make a purchase – blog intended to entertain – ENJOY!

How Does Afterpay Work?

Afterpay is another way for a consumer to pay either online, or instore.

  • Merchants offer Afterpay to end-customers with a BUY NOW, PAY LATER offer
  • End-customers pay for items in 4 fortnightly instalments
  • Afterpay does not charge customers any interest, establishment or monthly fees
  • After the initial Afterpay signup no additional information required at checkout
  • Afterpay pays merchants upfront (less Afterpay fee)
  • Afterpay retrieves funds from the consumer



Afterpay makes money by charging:

Retailers a fee for use of the Afterpay payment platform

Customers late fees if they don’t pay their instalments on time.

Afterpay Online

Here is a screenshot of how Afterpay works online:


  Member Offers Banner

Afterpay Instore

Here is an example of how Afterpay works instore:


1.First you sign up at the checkout and receive a barcode:



2.The merchant then scans your barcode and your purchase is complete:


Why Are Businesses Using It?

Ever since the invention of the credit card in 1950, businesses have been searching for methods to get consumers to part with their hard earned cash.

Merchants (Businesses) want a sale so much they are willing to part with as much as 3% of the sale value in fees to credit card companies.

Some businesses aren’t prepared to pay the full credit card merchant fees, hence why they sometimes pass part of the merchant fee on to consumers.

Afterpay is just another way for merchants to encourage you to buy today and once again they are prepared to pay Afterpay for this privilege.

Early evidence from a number of businesses offering Afterpay, suggests that it does work to increase sales.



The evidence above shows:

  • Afterpay users are up to 34% more likely to spend and
  • Afterpay users will spend up to 25% more than the average customer.

This evidence has been enough to get merchants to sign up in droves.




What About Consumers?

Let’s face it, we all like to live in the moment and face the consequences tomorrow.

It will come as no surprise that customers love using Afterpay’s buy now, pay later offer.




  • As at August 2016, 140,000 customers in Australia have used the Afterpay service
  • 65% of Afterpay customers are repeat users
  • As at August 2016, AfterPay was experiencing a net transaction loss rate of 0.9% – which means just under 1% of users were not completing their scheduled AfterPay repayments.


My Opinion of Afterpay

Afterpay is yet another way to buy now and pay later (or rather get it now and worry about the consequences later).


  • If used with discipline you can get the product now and pay later, with no fees or interest.
  • Unlike a credit card, AfterPay provides an automatic framework for repaying the amount in full


  • Encourages a ‘live in the moment’ mentality and can increase the tendency for impulse purchases
  • You can pay the Afterpay instalments using a credit card, which has the potential to exacerbate potentially problematic credit card habits.


Afterpay is a marketing method aimed at encouraging consumers to spend more now and worry about the consequences later.

Best Case Scenario:

Afterpay allows you to get the product you so desperately need now, and pay for it in regular instalments without paying interest or other fees.

Worst Case Scenario:

Afterpay allows you to purchase a product you don’t really need, in instalments on your credit card, which could further compound your already poor credit card habits (and the debt spiral associated with this).

The Final Word

Just like a credit card, Afterpay is a psychological play that has the potential to encourage impulse spending (after all that is why merchants are using it).

  • If you ever experience periods of habitual overspending, you regularly pay interest on credit card purchases, or have other debt issues, you should probably steer clear of Afterpay.
  • Afterpay is best used for purchases that you really can’t live without and paid off via your debit card not your credit card.

Have you started using Afterpay? Have you had a good or bad experience?

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The information on this blog and website is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision. We recommend you consult a licensed financial adviser in order to assist you.
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  • Maddy Mar 27,2017 at 4:37 pm

    Currently applying for a loan and after pay can’t provide me a statement for my account or even an account number for that instance. Making it very hard for my loan to be approved. Still not up to scratch as a lending agency in my eyes. Zippay provide the same service yet give you a statement.. I know who I will be dealing with in the future!

  • Brian Dec 31,2016 at 1:41 am

    I have to say thanks for explaining in a mana that is understandable. I have read many documents on this subject but still had many questions. After reading your review on After Pay all my questions have been answered. I would like to know a bit more on how Nada’s returne issue go’s if you have any more info on that it would be great. Once again thanks for a review that is understandable.

  • Shaz Williams Dec 11,2016 at 4:20 am

    I find Afterpay a godsend. On a tight budget it has been a lifesaver. We only have a MasterCard Debit card so make payments with our money so no interest is paid and we only buy what we know we can afford each fortnight but we wouldn’t have been able to in one hit without stretching ourselves. We have used it a dozen or so times. In relation to returns, that’s the merchants error. They need to communicate the return to Afterpay. Once communicated Afterpay adjust very promptly. If there is an issue call Afterpay. They are extremely helpful! Like everything, use it responsibly, only buy what you can afford each fortnight and like us be thankful responsible people on a budget have a wonderful opportunity presented to them 🙂

  • nada teknekat Oct 11,2016 at 12:20 am

    Afterpay is horrible – I returned the dress I bought because it didnt fit me. They are still charging me and have not returned my money… its been over week since its been returned….. no word from support from the retailer or afterpay.

    • The Wealth Guy Oct 11,2016 at 12:23 am

      Good point – returns must be more difficult for their system to manage. Thanks for the feedback. Keep us updated on the outcome.

    • The Wealth Guy Jan 10,2017 at 2:46 am

      Nada, take a look at Section 5 of Afterpay’s terms and conditions concerning refunds:

      Extracted as follows:

      5 Refunds
      (a) If you decide to return goods to a Retailer, which have been purchased using our Products, and request a refund, or a return and refund are otherwise accepted by the Retailer or permitted by law, you will directly arrange the return with the Retailer, ensuring that the goods are returned according to the Retailer’s returns policy or other instructions or your rights at law.
      (b) It is your responsibility to notify the Retailer if you intend to return any goods. The return must be completed within the period specified and in the manner required by the Retailer’s returns policy or as otherwise permitted by the retailer.
      (c) Unless we are notified by a Retailer that a return and refund is in progress, we will continue to process any Automatic Payments in accordance with the dates set out in your Payment Schedule.
      (d) Until such time that the Retailer has confirmed the return of the goods and has issued a refund to us for those goods, you will remain liable to us for the full payment of the goods, in accordance with your Payment Schedule.
      (e) Once the Retailer has issued a refund to us for the goods, we will issue a refund to your Nominated Payment Source (or, if that is not possible, to any other Card that you have provided details of) and/or adjust your Payment Schedule appropriately (including to reduce or cancel any future payments, if necessary).
      (f) Where you wish to return a product 120 days or more after the purchase date, we will no longer have any involvement in the product return process (i.e. the Retailer will provide any agreed refund directly to you).

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