Buy Now Pay Later (BNPL for short) has become one of the newest, most efficient, and most popular ways to get things now but spread your payments out over the weeks or months to come. Usually the BNPL provider that you use depends heavily on which merchant you’re shopping through. Although some merchants, such as Target and Amazon, accept several different providers. So you’re trying to figure out: Affirm vs. Afterpay. Here are the major similarities and differences between the two.
What Are Affirm and Afterpay?
Affirm and Afterpay are BNPL providers that make it easier for you to buy things from brick-and-mortar or online stores using short-term credit. When you choose Affirm or Afterpay as your payment method in-person or through online shopping, you can get what you bought now and then repay the BNPL provider in four equal payments, often interest-free, over the next several weeks or months.
From 30,000 feet up, Affirm and Afterpay have similar offerings; however, they differ when it comes to the nitty gritty.
Major Differences Between Affirm and Afterpay
Founding
Affirm
Affirm was founded in San Francisco, California, in 2012.
Afterpay
Afterpay was founded in Sydney, Australia, in 2014.
Countries of operation
Affirm
Affirm operates in the U.S. and U.S. territories.
Afterpay
Afterpay operates in the U.S., Canada, United Kingdom, and New Zealand.
Accepted by
Affirm
Affirm services more than 102,000 merchants, including Walmart, Target, Priceline, and Williams Sonoma.
Afterpay
Nearly 86,000 merchants around the world — including Kmart, Target, and Sephora — accept Afterpay.
Installment period
Affirm
Affirm offers two payment options.
The first option is a pay-in-four model, which allows you to make four interest-free payments with the first payment due at checkout. The remaining payments are due every two weeks.
The second option is a monthly payment model that allows you to space your payments out over 3-60 months. Monthly installments can come with interest rates.
Afterpay
Afterpay also offers a pay-in-four model, which is a standard payment system across most Buy Now Pay Later providers. With this model, you divide four interest-free payments over six weeks, with the first payment due when you make the purchase.
Rescheduled payments
Affirm
According to Affirm’s help center, the provider does not allow you to reschedule payments or give you more time to pay on a monthly basis. However, you can select which day of the month that you’d like to make payments if you set up automatic payments, which can come in handy if you’re looking to align your BNPL installment dates with your cash flow.
Afterpay
You used to not be able to reschedule payments with Afterpay. However, the service changed its policy to allow customers to reschedule payments. There are certain stipulations, though.
- Afterpay does not allow you to move the payment date on certain purchases.
- You can only move one payment per order.
- You are technically only allowed to move the second and third payments through Afterpay to align with your cash flow; if you need help moving your first or last payments, you should contact Afterpay customer service.
- Once the payment is overdue or due within 24 hours, you cannot reschedule the payment.
- If you have been an Afterpay customer for 42 days or less, you cannot access the rescheduled payment feature.
- Customers already taking advantage of a hardship repayment arrangement cannot access the feature.
Credit limits
Affirm
Affirm does not impose credit limits. If you make a purchase using the BNPL provider, Affirm loans come with prequalification. This means that if you want to take out a loan, Affirm will have to approve you for the loan amount before you make the purchase. Prequalifying will not affect your credit score, nor do you have to use the full amount that Affirm prequalifies you for.
Prequalification depends on a number of factors, including:
- Payment history with Affirm
- Overall credit history
- Length of time that you’ve had an account with Affirm
- Interest rate of the merchant you’re applying for
- Current economic conditions outside of your own credit or personal finance history
Afterpay
With Afterpay, you can have a balance of $2,000 on your account at any given time; each individual purchase can be a maximum of $1,500.
Afterpay likely won’t extend the maximum limit to new users. They will start you out with a smaller credit limit, and once you prove that you are a good BNPL customer, Afterpay can increase your credit limit.
Interest
Affirm
Affirm will charge interest from 0-30% depending on your credit history and the loan that you select at checkout.
Afterpay
Afterpay does not charge interest on its loans or installments.
Fees
Affirm
Affirm does not charge fees to open an account or take out a loan. It also does not charge late fees. However, your credit score may be negatively affected by a late payment.
Afterpay
All sales made through Afterpay are subject to a 4.17% merchant fee. Customers don’t have to pay any hidden or late fees unless they miss a payment or make it late. When you miss a payment, Afterpay charges a $10 late fee, plus another $7 fee if your account is not brought current after seven days.
When using Buy Now Pay Later, it’s important to use some sort of budgeting tool to ensure that you are avoiding late payment fees.
Credit check
Affirm and Afterpay do not do hard credit checks when you make a purchase using the service. Affirm runs a soft credit check to get a sense of your credit history, but Afterpay does not do a credit check at all. A soft credit check provides enough information to give the BNPL services a sense of your creditworthiness without penalizing your credit score with a hard inquiry.
How to Sign Up for Affirm
You can sign up for Affirm using the Affirm app, at affirm.com, or selecting Affirm as your payment method at a partner store.
- Go to the Affirm website, download the app, or choose to pay with Affirm at checkout
- When prompted, enter your full legal name, mobile number, email address, date of birth, and the last four digits of your social security number
- Complete sign-up and approve the purchase price
How to Sign Up for Afterpay
There are a couple of different ways to sign up for Afterpay. Additionally, the service requires a bit more personal information upfront to cut down on the verification process later.
- Go to the Afterpay website or download the app
- Enter your email address, phone number, date of birth, valid ID, and a credit or debit card, or bank account number
- Complete sign-up
How to Use Buy Now Pay Later Responsibly
Buy Now Pay Later services allow consumers to make purchases online or in-store by breaking up larger ticket items into a small number of fixed installment payments. BNPL is attractive to consumers because purchases are typically interest-free and don’t involve many of the hidden or late fees that come with bank accounts and credit cards.
The popularity of BNPL has grown exponentially in recent years — and for good reason. These payment options provide more opportunities for people of underserved and underbanked populations. However, there are also a number of potential risks involved.
Advantages of Buy Now Pay Later
- You get easier access to goods and services
- Customers pay low-to-no fees and interest rates on their payment plan
- You can maintain and build your credit score
Disadvantages of Buy Now Pay Later
- It is easy to overspend
- There are potential fees or interest charges and credit score damage
- Buy Now Pay Later can be difficult to manage
Frequently Asked Questions
Affirm vs. Afterpay: Which is better?
It is not a matter of which Buy Now Pay Later service is better. Rather, it is important to consider whether BNPL is the right choice for you at all.
The service that you use as a customer depends on which merchant or company you are purchasing from and in what country you are located. All brick-and-mortar and online retailers don’t partner with all BNPL companies.
Before deciding to make a purchase with BNPL, it’s important to consider: how much you really want or need the product or service, your budget, and cash flow.
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What happens if I never repay Affirm or Afterpay?
If you fail to make your scheduled repayments through Affirm, Afterpay, or any other BNPL providers, you can run into credit and financial issues. This is the same case as if you were to miss a payment to any number of credit card companies.
Afterpay charges you late fees as long as your account is not current. Your account may also get disabled, meaning that you would not be able to make future purchases with the BNPL service. Afterpay does not, however, report to the credit bureaus, so if you fail to make a payment it will not immediately impact your credit score.
Affirm, on the other hand, does not charge late fees. However, the BNPL provider does report to the credit bureaus, so a late payment can damage your credit score.
Are Affirm and Afterpay legit?
Affirm and Afterpay are both legitimate and secure services. Both keep customer data safe and sound and act much the same as credit cards, personal loans, and payday loans except with shorter-term repayment plans.
What is an alternative to Buy Now Pay Later?
Given that Buy Now Pay Later is a form of short-term credit, you have other options.
One option is to open a 0% interest credit card. This can be ideal for smaller, less expensive purchases. Typically, 0% interest credit cards come with an introductory period, meaning that after a certain amount of time, the interest rate will increase from 0%, often to an above-average rate. Deferred interest, which you would’ve avoided during the introductory period, will begin to accrue.
If you plan to open a 0% interest credit card for a specific purchase, it’s important that you have a payment plan in place to pay off your purchase before the introductory period lapses. If you don’t, you risk falling into credit card debt.
