Late payments are bad for our business. When you make a purchase using Afterpay, we pay the retailer up front on your behalf; that means we take on the full risk of repayment. So responsible spending is as important for us as it is for you. Where does our money come from? The simple answer is that our money comes from retailers and merchants who pay us a fee when you shop with them using Afterpay. We make more money from people making payments on time than we do from missed payments or late fees.
We will only charge a late fee if you miss a payment. But first, we will do everything we can to help you avoid this, including sending reminders leading up to the payment due date and an alert after a payment has failed. If you do miss a payment, you can’t buy anything else using Afterpay until your account is settled – which is another reason you missing payments is not how we earn money!
Does Afterpay target people who are more likely to miss payments?
No. At the core of it, we want Afterpay to be a tool for helping you to spend responsibly and manage your finances, never to encourage spending more than can be afforded. Plus, we don’t want you to miss payments; that is bad for our business as much as it is bad for you. In fact, we need you to make your payments on time, so that you can continue to use our service. This means we have a strong incentive to only approve customers to use Afterpay who can afford to pay us back.
For the small proportion of customers who may experience financial hardship, we have an easily accessible and generous hardship program to help, and we encourage those customers to get in touch as soon as they feel they need help.
How do the late fees work?
Our late fees are capped and don’t compound. We also pause your account until the balance is paid and you're back on track. As we pay the retailer upfront on your behalf when you use Afterpay to shop, if you do miss a payment then we will charge you a late fee.
For absolute transparency (because that’s what we believe in), for each order below $40, a maximum of one $10 late fee may be applied per order. For each order of $40 or above, the total of the late fees that may be applied are capped at 25% of the original order value or $68, whichever is less. We also pause your account until the balance is paid and you're back on track. We do everything we can to help you not miss a payment, and we certainly don't want you getting into further financial stress.