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Mandy Money

Mandy Money

how afterpay works

You’ve heard the name, and most definitely seen that little logo during your online shopping escapades – but what is the #afterpayit game?

How did Afterpay start?

Well, Afterpay is the brainchild of Nick Molnar and Anthony Eisen. They knew that people like to purchase items on credit but saw an increasing number of young adults, like you and me, shying away from the untrustworthy big banks & high fee credit cards.

And thus, in 2015, Afterpay was born.

How does it work?

Afterpay lets you pay off your purchase in 4 fortnightly instalments (including day of purchase!) with no added fees or interest. Sounds too good to be true? There has to be a catch right…

Not really! Provided you have enough money for that fortnightly instalment, Afterpay automatically deducts that amount from your bank account or debit card, and you won’t be liable for a late fee.

So how do they make money?

The majority of Afterpay’s earnings come from taking a cut of merchant sales. When you purchase something using Afterpay, they take ~4% of the revenue from the sale, and the rest goes to the retailer. A small amount of Afterpay’s profits also come from customer late fees.

So what comes next?

With 4.3 million customers already enjoying their ‘buy now, pay later’ services across Australia, New Zealand, US and UK, Afterpay is eyeing their biggest market yet… China.

They are looking to establishing their foothold in the Chinese market with the help of Tencent – the country’s biggest technology company and the creator of WeChat – who recently paid $300m for a 5% stake in Afterpay. 

Any other companies you want analysed? Hit mandy upppp

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