You may not remember the term ``Layby``, but this was a widely used purchasing process throughout the 80's. It allowed buyers to put items on hold while paying them off over a defined period of time. Fast forward 30 years and you have ``AfterPay``. Basically, Afterpay works by enabling consumers to purchase items through a layby-like process of four payments over an eight-week period, but unlike the layby of the 80's, you actually get to take your purchase home straight away before paying off the balance electronically.
THE BENEFITS OF AFTERPAY
- Set installments for customers. Afterpay informs you about purchase installment amounts and frequency to make it easier for potential customers to decide whether or not they want an item.
- New customers. Afterpay gives you the opportunity to benefit from more sales and the possibility of an increased customer base.
- Rise in repeat purchases. The likelihood of repeat customers to purchase from your business increases, plus they will be more inclined to spend more per transaction.
- Payment upfront. As soon as the customer receives their item, Afterpay settles with their merchants quickly and automatically. There are no complicated processes or lengthy wait times associated with payment.
- Name recognition. As Afterpay is currently used by over 1,400 retailers across the country, it’s clear to see that customers from all industries are a fan of it. You are able to benefit from this recognition if you incorporate Afterpay into your business.
- Zero fraud or credit risk. This is really important. Although it might seem like Afterpay could be high-risk, Afterpay assumes all end-customer non-payment risk for every transaction. This takes you and your business off the hook and you no longer have to chase up defaulting customers.
THE AFTERPAY PROCESS
Get paid upfront, while your customers pay over time
Sign up
Customers select Afterpay at checkout and fill out a short form to get an instant approval decision.
Purchase
Afterpay pay your business the full amount upfront so you can ship orders out right away.
Pay over time
Afterpay split the cost of the order into 4 equal installments, every 2 weeks.
WHAT YOU NEED TO KNOW
As a merchant, the Afterpay signup process is relatively quick and simple. After you have filled out and submitted the enquiry form, a customer service representative will contact you in order to discuss what your needs are with Afterpay. Afterpay works both online and in-store, so you can choose how it suits you best.
If a customer buys something online using Afterpay, they simply select Afterpay at the checkout, and once the customer has received their item, Afterpay will settle with you and assume any credit or fraud risk. The instalments that the customer pays go to Afterpay instead of you since Afterpay will pay the debt that is owed to you initially.
WHAT WILL I BE CHARGED AS MERCHANT?
The fees that you can be charged depend on your business’s agreement with Afterpay. However, the fees below are a general guide as to what businesses can expect with an Afterpay agreement.
- A $0.30 fee per transaction.
- A commission rate fee that is applied per transaction. This can range from 4-6% based on your agreement.
Although $0.30 per transaction doesn’t seem like a lot when you’re selling your products for much more than that, it’s important to factor in the commission rate fee as well.
HOW TO START OFFERING AFTERPAY
You’ll need the following
- Your ABN
- Your Point of Sales (POS) provider
- Your average order value
- The total for your annual sales
- The payment platform you use
- Personal details, such as your name and address
- Your industry
- The type of business you have
- What sales channels you use and whether they’re online, in-store or both
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