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If you have been doing online shopping recently in Canada, you may have noticed Afterpay as a payment option with select retailers. Afterpay is new to Canada (they’ve been in other countries for years) and allows you to make your purchases now while paying later.

The concept of buy now, pay later, is nothing new, but it has evolved over the years. What makes Afterpay stand out is that they advertise no fees and no interest charges on your purchases. That’s a massive contrast to credit cards that charge 20%+ interest. Read my Afterpay review now and find out if this payment option is as good as it sounds.

How does Afterpay work?

When you’re shopping online and ready to checkout, participating retailers will have Afterpay as a payment option. Afterpay splits the cost into four equal payments, with the first one due at the time of purchase. All additional payments happen bi-weekly.

Let’s say you’re buying $200 worth of stuff at Roots. You would pay $50 right away with Afterpay. Every two weeks after that, you’d pay another $50 automatically until the balance is paid off. Essentially, the total amount would be paid off after six weeks. You do have the option to make a payment manually at any time.

If you’re going to use Afterpay, you need to open an account with them. This is free to do, and there is no credit check. Your account is then linked to your debit or credit card, and payments are then automatically withdrawn every two weeks.

What are the Afterpay fees?

As far as the consumer is concerned, there are no interest charges or additional fees to use Afterpay. This is vastly different from credit cards that typically charge 20%+ interest if you don’t make your payments on time.

Yes, credit cards indeed have an interest free period, but if you’re late or don’t make full payment, you’ll be charged right away.

Afterpay does warn you of any upcoming payments. However, if you don’t have enough money in your account (if connected to debit), your bank may charge you an NSF fee. Also, your Afterpay account would be frozen until you’re able to make your payment.

Merchants who partner with Afterpay are charged a 4 to 6 per cent fee for the sale of each item. That may seem high (because it is), but retailers get the cash right away, and Afterpay assumes the risk if consumers don’t pay off the products in full.

Where is Afterpay accepted?

Globally, Afterpay has over 48,000 partner merchants, but in Canada, the there are far fewer. The most common retailers that offer Afterpay in Canada include:

  • Aritzia
  • Herschel Supply Co.
  • Roots
  • Lush
  • American Eagle
  • Ardene
  • Huda Beauty
  • Native Shoes

Is there a maximum you can spend with Afterpay?

When you sign up for Afterpay, you’re given a limit at the start which is usually under $200. If you make payments on time, your limit will likely increase in the future. The company encourages users to be responsible with their spending.

How do refunds work with Afterpay?

The return/refund policies are set by the merchant where you made the purchase. Once you make a refund, the retailer will process that information directly to Afterpay and it’ll be shown in your account. Assuming you have an outstanding balance, upcoming payments would be cancelled and you’ll be issued a refund for the amount you’ve already paid. If you’ve already paid off the item in full, the entire amount will be refunded back to your original form of payment.

Who is Afterpay?

Afterpay is a fintech company founded in 2015 in Australia and has expanded to New Zealand, the United States, United Kingdom and Canada. 

Since Afterpay is a publicly traded company on the Australian Securities Exchange, you can see how their stock performance has been by looking up the symbol APT.AX.

With over 10 million global users, Afterpay is known as the industry leader when it comes to buy now, pay later. 

Is Afterpay worth it?

I personally don’t mind any system that promotes low and/or no fees. Afterpay Canada is an excellent alternative to credit cards and their high interest rates, but Afterpay may encourage bad habits if you’re not disciplined.

Since you’re buying now and paying later, you may start to think of your spending as it’ll only cost me $X every two weeks. With that mentality, you may end up spending more in the long run. You really need to think about how much you’re spending in total and if you’ll have enough money to pay it all off when your payments come due.

I will say this, Afterpay is better than some of the other buy now, pay later options. One major bank in Canada offers a similar payment format with one of their credit cards, but when you do the math, the fees are incredibly high. With Afterpay, there are no fees to consumers (assuming you make all your payments).

Should you use a traditional credit card instead?

Now let’s say you truly are good at keeping your spending in check and you always make your payments on time. If that’s the case, you might as well use one of the best cash back credit cards in Canada or one of the best travel credit cards in Canada so you can earn cash back or points.

Even if you don’t like the idea of having a credit card, you could get a prepaid credit card such as KOHO since you’ll earn cash back on every purchase.

Final thoughts

I think the buy now, pay later space will only continue to grow in Canada. Companies such as Afterpay can be useful since they don’t charge interest or any additional fees, but consumers need to be aware of their spending habits. 

Afterpay Review

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