Afterpay lets you buy something now and pay for it in four equal, interest-free payments spread over six weeks. You pay the first quarter at checkout, and the rest comes out of your linked card automatically every two weeks. It sounds simple, and mostly it is — but the details around spending limits, late fees and eligibility catch plenty of people out. Here is how it actually works, step by step.
If you are new to buy now pay later altogether, our guide on what buy now pay later is explains the basics, and our Afterpay vs Zip Pay comparison shows how the two biggest options stack up. For the official rules, see Afterpay’s own site (afterpay.com).
How Afterpay Works in Short
Afterpay is a buy now, pay later service. When you check out with Afterpay, Afterpay pays the retailer in full straight away, and you repay Afterpay in four instalments. There is no interest charged on the standard Pay in 4 plan, which is the part most people know. What many do not realise is that your spending limit is set by Afterpay, every purchase is approved individually, and missing a payment pauses your account and can attract a late fee.
Who Can Use Afterpay?
To set up a Pay in 4 account you need to:
- Live in Australia or New Zealand
- Be over 18 years of age
- Have an Australian or New Zealand debit card or credit card linked as your preferred payment method
- Have a valid, verifiable email address and mobile number
- Be capable of entering into a legally binding contract
Joining is free, and Afterpay says it is fast to join without a credit check for a standard account. A credit check may apply later, for example if you are assessed for a spending limit increase.
How to Use Afterpay Online: Step by Step
- Shop as normal. Add the items you want to your cart at a store that accepts Afterpay.
- Choose Afterpay at checkout. Select it from the payment options instead of paying the full amount upfront.
- Log in or create an account. You will be redirected to Afterpay to sign in or set up an account with your email, mobile number and card details.
- Check your payment schedule. Before you confirm, Afterpay shows you the four payment amounts and their due dates. The first payment, roughly 25% of the total, is due at the time of purchase.
- Confirm the order. The retailer ships your order, and Afterpay takes the first payment from your linked card.
- Pay the rest automatically. The remaining three payments are deducted from your nominated card roughly every two weeks, over the following six weeks.
- Manage it in the app. You can track upcoming payments, check your available spending limit and make early payments in the Afterpay app.
How to Use Afterpay In Store
Afterpay also works in physical shops through the Afterpay Card. Set it up in the Afterpay app under the in-store tab, add it to your digital wallet, then tap to pay with Apple Pay, Google Pay or Samsung Pay at the counter, just as you would with a normal card. The same four-payment schedule applies.
What Is Your Afterpay Spending Limit?
Afterpay does not give every new customer the same limit. New customers start at a lower spending limit, and it may rise gradually over time with consistent on-time payments. Every transaction still goes through an approval process that looks at factors including your available limit and your payment history, so an order can be declined even if you have used Afterpay before. If a payment is missed, your account is paused and your limit may drop.
What Happens If You Miss a Payment?
If a scheduled payment fails, Afterpay pauses your account, so you cannot make new purchases until your payments are up to date. Late fees are capped: they will never exceed 25% of the order total or $68 per order, whichever is lower.
- Orders under $40: a one-time late fee of up to 25% of the order total applies.
- Orders of $40 or more: a $10 late fee is charged when a payment is missed. If the amount is still unpaid after seven days, an additional $7 late fee applies, with the same pattern repeating until the cap is reached. Partial amounts of the $10 and $7 fees may be charged to stay within the cap.
Afterpay also sends payment reminders, and for Pay in 4 it offers the option to reschedule eligible upcoming payment dates. If you are struggling to pay, contact Afterpay as early as possible — its hardship program is designed for exactly that situation, and you can call on 1800 602 155.
Is Afterpay Interest-Free?
Yes, for the standard Pay in 4 plan: there is no interest on your four payments. The only extra cost is the late fee if you miss a payment, as set out above. That is different from a credit card, where interest accrues on an unpaid balance month after month. Afterpay also offers a separate Pay Monthly option, which has its own fees and terms, so check which plan you are on before you commit.
Tips to Use Afterpay Without Trouble
- Only split purchases you could afford to pay for in full — the instalments still have to come out of your account.
- Check the payment dates before confirming, and make sure money will be in the linked account on each due date.
- Keep track of overlapping orders: several small purchases can add up to a large fortnightly total.
- Turn on reminders in the app, and pay early if a due date falls on a tight week.
- If a payment is going to fail, reschedule it or contact Afterpay before the due date, not after.
Frequently Asked Questions
Do I need a credit card to use Afterpay?
No. You can link a debit card or a credit card as your preferred payment method.
Does Afterpay check your credit score?
Joining a standard account is fast and free without a credit check, according to Afterpay. A credit check may be performed when you are assessed for a spending limit increase.
Can I pay off Afterpay early?
Yes. You can make early payments through the Afterpay app.
What happens if I return something bought with Afterpay?
Returns follow the retailer’s policy. Once the retailer processes the refund, your remaining Afterpay payments are adjusted, and any payments already made are refunded to your card. Check the payment schedule in the app after a return to confirm the change.
Is Afterpay regulated?
Yes. Afterpay Australia Pty Ltd holds Australian Credit Licence 527911.
