AfterPay - a new way to encourage your customers to spend

Thursday 6 April 2017
Nic Crowther's picture
Co Editor
The Shaker

Digital disruption seems to be at every turn. Now, the world of online retail is receiving a shot in the arm thanks a new payment system that offers instant gratification with deferred payment terms – all at (potentially) zero-cost to the buyer.



As a modern-day version of lay-by, Afterpay allows you to take the goods home immediately 9or have them delivered to your home) and automatically implements four payments over following two months. Approval to buy is granted almost immediately if the buyer has an established AfterPay account.



The popularity of the system – now used by over 200 Australian retailers – is its simplicity. Once a buyer had established an account, the entire process is essentially automated: the sale is processed, the billing cycle established, payments automatically deducted and notifications sent should the buyer fail to meet their commitment.



What makes the system even more attractive is that unlike companies such as GE money or even standard credit cards, is there are no interest charges. Instead, a fee of $10.00 is charged if the payment is late, and another $7.00 is added if the delay extends to over a week.


To assist, buyers are notified via email and SMS if a payment has failed, and there is a grace period until 11.00pm that day to rectify the payment before the $10.00 charge is applied.

The advantage of this system is that perceived barriers to purchase – such as entering credit card numbers or the unavailability of the total funds – are removed. The sale can be completed in seconds without the need to fork out the full amount.



This is a simple lesson in automation: make the purchasing process simple and your customers will be happy to part with their money. This is part of what has made Uber such a success; the idea that you no longer need to present payment means the barrier between buyer and seller has been dismantled.



Much like casino chips aim to remove the perceived value of money, being able to spend without facing the actual cost only encourages consumers to spend. Little wonder that so many online retailers are jumping on board.