What is Afterpay?

Fintech company expanded into US in 2018 and works with droves of global brands

Afterpay is a technology-driven, “buy-now, pay-later” platform that facilitates e-commerce between retail merchants and customers.

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The digital platform was founded in Australia in 2015. Since then it has offered shoppers more flexibility with their spending by allowing them to pay over time through smaller installments instead of one lump sum.

The company expanded into the United States in 2018 and works with droves of global brands, including Urban Outfitters, Anthropologie, Free People, Asos and Aveda.

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It was named one of Australia’s fastest-growing fintech companies by global market intelligence firm IDC. By 2016, Afterpay was listed on the Australian Securities Exchange. Two years later, the platform boasted more than 14,000 Australian retailers with more than 1.8 million Australian customers.

With the service, consumers are able to order and receive products right away while paying for them in four separate installments. After a customer is approved, Afterpay will pay the retailer in full so orders will be placed and shipped immediately.

"Afterpay helps shoppers get over that initial price hurdle by offering a platform to help budget for things that they want without needing to take out a loan or open a credit card," founder and CEO of Afterpay Nick Molnar said in 2018.  "This is particularly relevant for millennials who are reluctant to use credit cards and other forms of traditional finance."

In fact, the company noted on its website that 63 percent of millennials don’t own a single credit card.

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The payments are made automatically every two weeks, however, Afterpay notifies customers ahead of time before pulling the funds. What's more, the installments are interest-free so shoppers will not be obligated to pay any upfront fees or interest unless they miss a payment, meaning there are no funds in their account.

Since Afterpay pays the retailer in full, it assumes all responsibility of credit and fraud risk for the retailers. That said, if a customer misses a payment, Afterpay will charge them an $8 fee. The customers will also be barred from using the service until the payments are up to date.

"Afterpay is deeply committed to responsible spending and is always free for customers who pay on time," the company's website reads.

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