Afterpay Vs ZipPay – How much does Afterpay & ZipPay charge merchants?

Traditional Lay-Buy is so last century. Today, a new kind of Lay-Buy exists and is exploding. Starting solely online, this innovative approach to shopping has now made its way into brick and mortar stores.

The “buy now and pay later” phenomenon is experiencing exponential growth. Afterpay and ZipPay have cornered the market, allowing consumers to take their goods home without having to pay for them upfront.

Consumers are now increasingly demanding that merchants offer this type of service. So, who wins the Afterpay vs ZipPay battle? In this article, we investigate the finer details of each and explore the merits of each. Hopefully, this post will give you a better understanding of which option is best suited to your specific requirements.

How does “buy now pay later” work?

Both Afterpay and ZipPay have similar eligibility criteria. Users must be 18 years of age to use both services with a valid email address. Users also have a debit or credit card to link to their accounts.

ZipPay allows a simple bank account and gives you the option of allowing users to use a Facebook or PayPal account instead of an email address.

Once eligible, users are not automatically approved ongoingly. Afterpay considers users each time they want to use the service and reserves the right of refusal.

Even though Afterpay has eligibility criteria, they don’t make enquiries into the user’s credit history. Nor do they require proof of income.

ZipPay, however, does conduct credit checks as part of the approval process, which is performed by Equifax or illion.

Consumers won’t be able to build up your credit score using either Afterpay and ZipPay. That is because both services are not required and do not report positive behaviour to the credit reporting bureaus.

However, users should bear in mind that does not mean you will escape the penalty for negative credit behaviour.

If you run a debt worth more than $150 outstanding after 60 days, both Afterpay and ZipPay are required to report it. If a negative report is filed, you will receive a default notice on your credit report that will last five years, even after finalising the outstanding debt.

What is Afterpay – How does Afterpay Work?

Afterpay is the most popular way for a customer to shop both online and offline, getting their goods while paying for them later. Repayments are broken up evenly into four payments and scheduled fortnightly. Consumers love it because there are no Afterpay fees or interest unless a payment is late.

Typically, Afterpay has a limit of $500 for accounts linked to a debit card and up to $1,500 if attached to a credit card. Payments are made automatically, with the first payment due two weeks after the purchase. Users can pay in advance if they wish. All purchases over $500 require 25% upfront at the time of sale.

The benefit of Afterpay for business is that they can use the service to offer their customers interest-free credit, but typically get paid in around 48 hours, while Afterpay assumes the risk.

Afterpay accepts Mastercard, Visa and all other major credits cards issued in Australia. Online, it is also designed to work seamlessly with WooCommerce, Shopify, Magneto and Neto.

Afterpay fees for merchants 

Online merchants pay a flat fee of 30cents plus commission for each transaction made via Afterpay. Commissions range from 4 to 6 percent, depending on the value and volume of transactions. The more volume, the lower the percentage the commission will be.

 Is Afterpay worthwhile?

Afterpay fees are higher than credit card transaction fees; however, the advantage of offering customers credit has proven to boost sales, and as such, likely outweighs the additional Afterpay costs.

As Afterpay increases in popularity, so does the demand for the service. Many consumers today are preferring to shop only with retailers who offer the Afterpay or similar option of buy now pay later.

Customers are also more likely to spend more money when shopping when using Afterpay.

Retailers should register for Afterpay and discover for themselves if it has a positive impact on sales for their store.

What is ZipPay – How does ZipPay work?

Similarly to Afterpay, ZipPay is another “buy now pay later” payment service, allowing customers to get products immediately and pay back ZipPay over a scheduled period.

ZipPay is more like a line of credit, with greater flexibility for customers to set up their own repayment schedule based on their requirements. Merchants benefit with greater flexibility and get paid faster. ZipPay pays merchants every day at 4 pm.

Customers have the option of paying weekly, fortnightly or monthly. However, a minimum payment of $40 per month is required. ZipPay offers interest-free; however, a $6 monthly fee applies after 60 days. Paying the balance in full within 60 days avoids the monthly fee.

A $5 late fee exists for those who don’t make a payment for 21 days – after the initial fee-free period.

Users can sign up for direct debit, allowing payments to be taken out from their bank account automatically or credit card. With the fee structure of ZipPay, users could end up paying the same or more as using their credit card.

Three credit tiers exist with ZipPay: $350, $500 and $1,000. Users will be evaluated and approved for one of these limits upon application. When approved for one of the lesser limits, the flat fee for late payments could mean you are paying higher interest than clients with a higher ZipPay credit limit or using a credit card.

ZipPay fees for merchants

ZipPay is cheaper than AfterPay. Merchants are charged 15 cents plus commission for every transaction made via ZipPay. This commission ranges from 2 to 4 percent.

ZipPay’s upper limit on commission is equivalent to AfterPay’s lower limit. And, even if you pay the upper limit, you will still save 15 cents on each transaction.

Is ZipPay worthwhile? ZipPay Vs AfterPay

Typically, a cheaper service is expected to underperform in specific areas compared to more expensive services. This happens to be accurate with the cheaper alternative, ZipPay.

While ZipPay is compatible with Shopify, WooCommerce and a few other popular platforms, the service of ZipPay vs Afterpay sees Afterpay win out in this area. In saying that, ZipPay is willing to work with users if they don’t have a compatible platform. Their dedicated team encourages merchants to contact them for assistance with integration.

Is Afterpay worthwhile?

Afterpay fees are higher than credit card transaction fees; however, the advantage of offering customers credit has proven to boost sales, and as such, likely outweighs the additional Afterpay costs.

As Afterpay increases in popularity, so does the demand for the service. Many consumers today are preferring to shop only with retailers who offer the Afterpay or similar option of buy now pay later.

Customers are also more likely to spend more money when shopping when using Afterpay.

Retailers should register for Afterpay and discover for themselves if it has a positive impact on sales for their store.

So, what’s best Afterpay or ZipPay?

While Afterpay and ZipPay are marketed as interest-free, it’s vital to calculate the interest and fees together to discover the real costs. With ZipPay, you can also be liable for account-keeping fees, which can quickly and perhaps unexcitingly rack up.

Why do merchants offer one service over the other?

The fees & charges of Afterpay vs ZipPay will vary for each business, and some businesses will value faster payment than others.

Another important factor for merchants is the integration with their existing point-of-sale (POS) and e-commerce systems. Also, merchants may choose to go with Afterpay due to it being more popular with consumers and a desire to provide a platform that clients are more comfortable using.

Quikclicks have expertise integrating both Afterpay and ZipPay – “buy now pay later” services.