How Afterpay Works

Afterpay is a provider of Buy Now Pay Later (BNPL) financing that allow you to split a purchase in four easy payments. In contrast to other providers that also offer monthly installments over $1,000, Afterpay focuses exclusively on BNPL loans that max out at $600 for a given purchase and provide a friendly form of payment for borrowers with poor or no credit history.

Pre-purchase

On the home screen, you're able to explore online retailers where Afterpay is accepted as well as local stores that accept mobile payments made with their virtual credit card. Unlike other BNPL apps, Afterpay's virtual card can't be used for online purchases.

Like most BNPL apps, Afterpay allows you to save retailers and products to a Favorites list, which can be accessed on the "Profile" tab. While the app allows you to search for specific products, it only returns a list of retailers where the product might be found, rather than a direct link to where you can buy the product, as Klarna app does.

Purchase

When wanting to use Afterpay in physical retail stores, the app provides a helpful map of local stores that accept their virtual card. For e-commerce purchases, Afterpay's allows you to browse retailers' websites directly in the app. When time comes to pay, you'll simply tap the Afterpay button at checkout and sign into your account. You'll have a chance to review your personal information and repayment method before submitting the application.


One thing to note is that Afterpay doesn't run ANY inquiry on your credit history when deciding whether or not to approve you for the loan (as opposed to the "soft inquiry" used by most BNPL providers). For this reason, the large majority of first-time applicants are approved and returning users with a history of on-time repayments have a strong chance of being approved up to a spending limit. Finally, while $600 is the maximum amount that can be financed in a single purchase, Afterpay allows you to cover excess amounts using a different form of payment.

Post-purchase

As is the case with most BNPL providers, Afterpay sends you text and e-mail reminders when a payment is upcoming. However, Afterpay offers an additional layer of flexibility in repaying your loan. You always have the option of repaying the full loan or any custom amount in between your scheduled, bi-weekly payments. For many loans, you have the ability to change your payment date, when, for example, a paycheck is scheduled to come just after the scheduled due date.


Like Klarna, Afterpay rewards you as you repay loans. After 30 on-time payments on orders $40+, you'll gain access to Pulse Rewards, which includes perks such as delaying the first installment on future loans by two weeks and accessing exclusive offers in the app. Finally, the app provides a nice, clean view of the amounts you owe over the coming 15, 30 and 60 days.



NOTE: This post was based on Version 1.33.1 of the Afterpay iOS mobile app