BNPL Platform Afterpay Introduces Monthly Payment Option
The rise of “buy now, pay later” — or BNPL — platforms in recent years has been well documented. Seen as an alternative to credit cards, the appeal of these services is the ability to finance purchases by making a series of payments (usually four) while not worrying about interest or other fees. Now, AfterPay is expanding beyond this core payment plan by introducing a monthly payments option.
First, the new monthly payment feature will only be available on purchases between $400 and $4,000. For eligible purchases, consumers will be able to select terms of six or 12 months. Notably, unlike Afterpay’s “pay in 4” model, purchases financed via monthly payments will be subject to interest. However, there are no late fees. Additionally, customers can see the total amount owed and view their payment plan before enrolling. Financing for monthly payment plans is offered in partnership with First Electronic Bank.
To launch the new monthly payments feature, Afterpay is partnering with a selection of online retailers. These currently include Bellacor.com, EyeBuyDirect, FWRD, Your Mechanic, and more. Afterpay says it plans to add more merchants to the program soon and will expand the feature to merchants outside of the United States beginning in 2023.
In a statement about the new option, the head of Cash App Asia Pacific (note: Cash App and Afterpay are both owned by Block Inc.) Lee Hatton stated, “Our new offering is a natural extension of the Afterpay experience – giving customers a new way to take more control and have more choice in the way they pay. We look forward to supporting customers with yet another smart budgeting tool.”
Afterpay’s pivot into monthly payment plans comes as the BNPL market has seen some shake-ups. For one, Apple is expected to launch its own “buy now, pay later” option called Apple Pay Later. Meanwhile, major players in the space, such as Klarna, have made headlines after seeing their valuations fall from previous highs. Additionally, BNPL offerings continue to gain interest from regulators as some have been critical of the practice.
Overall, this expansion of Afterpay’s platform seems like a logical one that might appeal to certain consumers. At the same time, the introduction of interest may be a turn-off to those who have come to enjoy the basic BNPL structure. Nevertheless, with the market growing more crowded, it’s become obvious that BNPL startups will need to diversify in order to continue growing. Whether this move will allow Afterpay to do that remains to be seen, but it’s something worth watching.