Whether you realize it or not, the world of bills is changing. A decade ago, subscriptions were hardly a thing. Now we’ve fully embraced them. Buy Now Pay Later (BNPL) — not very popular even a few years ago, and now a large percentage of Americans have to bake these costs into their monthly expenses. Among them are Sezzle and Afterpay — two major Buy Now Pay Later services that allow consumers to make purchases now and repay them in installments later. When it comes to Sezzle vs. Afterpay, there’s a lot to consider, including credit limits, fees, which businesses accept them, and more.
What Is Sezzle?
Sezzle is a BNPL service that makes it easier for consumers to buy things from a brick-and-mortar or online store, even if the person does not have enough money in their account. When you pay with Sezzle in person or through online shopping, you can get what you bought now and then repay Sezzle in interest-free installments over the next several weeks.
What Is Afterpay?
Afterpay, similar to Sezzle, allows you to purchase today from in-person stores and e-commerce companies. Then, Afterpay sets up a repayment plan so you can settle up later in four interest-free installments every two weeks.
As a consumer, you will only get hit with a fee if you make a repayment late; otherwise, you don’t have to worry about fees. Afterpay is integrated into the checkout experience as a payment method, like any other debit or credit card.
Major Differences Between Sezzle and Afterpay
Sezzle and Afterpay are similar, but there are several differences in how they operate. To the average person, most of those differences will not cause a fuss. But when it comes to which BNPL solution you are choosing to add to your website as a small business, or if you’re interested in how expensive your fees will be if you miss a payment, read on.
Countries of operation
Sezzle is a Minneapolis, Minnesota, firm that operates in both the U.S. and Canada.
Afterpay is a firm based in Australia that operates in the U.S., Canada, United Kingdom, and New Zealand.
Over 40,000 retailers in the U.S. and Canada accept Sezzle.
Nearly 86,000 merchants around the world accept Afterpay.
Sezzle and Afterpay both divide your purchase into four interest-free repayments over six weeks. The first payment is charged when you make the purchase.
Sezzle allows you to reschedule your payment for free the first time. If you need to reschedule a second or third time, Sezzle will charge you a $5 fee per rescheduled payment.
If you need to reschedule a payment, you should try to do so at least 48 hours before your payment date. Once payment processing has begun, you cannot reverse it.
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.
Sezzle has a credit limit of $2,500. However, if you are a new Sezzle customer, you likely won’t get access to the full credit limit on your first purchase. Sezzle may offer you a lower credit limit of a couple hundred dollars. Once you make on-time payments and prove that you are a responsible borrower, Sezzle can choose to raise your credit limit up to the full $2,500.
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.
Like Sezzle, 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.
For merchants, Sezzle typically charges a $0.30 flat fee plus 6% of the transaction price for each purchase. However, for customers, purchases made with Sezzle are known for being fee-free. If you make all of your repayments in full and on time, Sezzle will not charge you a fee. You may receive a fee, though, if:
- You reschedule more than one repayment
- Your payment has failed
On the bright side, Sezzle offers a grace period. If you miss a payment but resolve it within 48 hours, Sezzle will waive the fee. Until you handle the repayment, Sezzle will not approve any new purchases.
All sales made through Afterpay are subject to a 4.17% merchant fee. Customers don’t have to pay any hidden 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 a late payment and unnecessary fees.
Sezzle and Afterpay do not do hard credit checks when you make a purchase using the service. Sezzle runs a soft credit check to get a sense of your credit history, but Afterpay does not do a credit check at all. Soft credit checks provide 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 Sezzle
To become a Sezzle customer, you can sign up in a few simple steps. Sezzle requires a couple of pieces of personal information in order to complete your sign-up.
- Go to the Sezzle sign-up page
- Click on Shopper Sign Up
- Enter your name, email address, and date of birth. Then create a pin
- Click submit
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 (BNPL) 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 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.
Pros of Buy Now Pay Later
- You get easier access to goods and services
- Customers pay low-to-no fees and interest charges 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
Afterpay vs. Sezzle: 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 Sezzle or Afterpay?
If you fail to make your scheduled repayments, such services as Sezzle, Afterpay, and other BNPL providers can cause financial issues. The service will charge 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.
Sezzle reports your payments to the three major credit bureaus — Equifax, Experian, and TransUnion. Therefore, if you miss you payments, you can expect to see a decrease in your credit score. This can also impact your ability to use BNPL services and other lines of credit in the future.
Are Sezzle and Afterpay legit?
Sezzle 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 the difference between Sezzle and Sezzle Up?
Sezzle is the company that operates the Sezzle Up credit builder function. When you sign up for Sezzle, you have to pay off your first order on time in order to receive the Sezzle Up offer.
When you upgrade to Sezzle Up, the service will issue you a spending limit that you can use and repay repeatedly. You also give the BNPL service permission to report your payments to the bureaus, which can boost your credit score.
Can I pay off my Sezzle and Afterpay purchases early?
With both Sezzle and Afterpay, you can make your repayments at any time before your due dates. You can set up automatic payments through your Sezzle and Afterpay accounts, or you can pay each one manually.
There is no financial benefit to paying off your purchases early since interest does not accrue and the BNPL services won’t cancel any of your balance for early repayments. However, it can pay off to repay your purchases earlier so you can align the bills with your paydays and eliminate any stress associated with approaching due dates.
Does Sezzle up show up on your credit report?
Standard Sezzle purchases do not get reported to the credit bureaus and, therefore, do not show up on your credit report. However, if you have Sezzle Up, it will show up on your credit reports.
Sezzle reports your repayments to the bureaus. If you consistently make on-time payments, it will positively impact your credit scores; however, if you miss payments or make them late, it can negatively affect them.
You may not see Sezzle activity on your credit record for up to 60 days after signing up.