Affirm vs Afterpay: Which BNPL Is Best?

Which Buy Now Pay Later Service is Right For You?

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How do you choose between Affirm vs Afterpay when selecting a BNPL provider? The demand for Buy Now, Pay Later (BNPL) opportunities has accelerated significantly in recent years, and this has led to an increase in the number of service options.

Currently, the global buy now, pay later market size is expected to reach a value of $20.4 billion by 2028, registering a CAGR of around 22.4% from 2021 to 2028, according to reports from Grand View Research. Numerous factors, including the pandemic, have prompted customers to search for more flexible ways to pay for goods and services.

Affirm and Afterpay are just two of the tools consumers can use to access the buy now, pay later services they need. Both applications make it easier to handle the cost of a big payment over a number of months. Here’s how you can make the choice between the two.

Affirm vs Afterpay: An Introduction

Affirm and Afterpay are both very similar products. They allow users to pay for a large item or purchase up-front with only a small initial fee, or a percentage of what they should be paying overall. Over time the customer pays for the remaining balance of the purchase with instalments.

Afterpay and Affirm will both ask for payments using scheduled instalments over a term you agree to when you first make your purchase. In a lot of ways, the experience is very similar to using a credit card, but it can have a lot less of an impact on your finances if you choose something with low interest. However, you will need to ensure you’re paying everything off fully.

What is Afterpay?

afterpay homepage - affirm vs afterpay

Afterpay (now Clearpay) is a little simpler to access than Affirm, because it requires no initial credit check for approval. Afterpay was founded in Sydney Australia in 2015 and has millions of global customers and thousands of merchant partners today. The business model allows users to access purchases over time without paying any fees or interest, provided you pay what you owe on-time.

What is Affirm?

Affirm is a similar solution to Afterpay, with no fees or surprises, provided you’re willing to pay back everything you agree to on-time. With $17 million in purchases (and counting), the company has still not charged any late fees.

Affirm vs Afterpay: How They Work

Using Affirm and Afterpay is relatively straightforward. Both solutions follow the same basic processes.

How does Afterpay Work?

With Afterpay (Clearpay), you get the app on your phone, and use it to shop for your favorite brands. You can see your instalment options when you add items to your cart and choose “Clearpay” as your payment method.

When you agree to the plan, you’ll make the first four payments (out of 10) initially and pay the rest over a period of 6 weeks. Afterpay makes it quick and easy to sign up by asking for basic information like your email, phone number, and date of birth. You’ll also be able to check your available spend and set smart limits to ensure you don’t go over what you can afford.

After making a purchase, Afterpay will send reminders to ensure you don’t miss a payment. If you do miss something, your account is paused until you’re back on track.

Afterpay spending limits start small at around $150, and gradually increase over time. If you’re a new user, your spending limit will be quite small, until you prove you can pay everything back on time. Your spending limit can also decrease if you’re not making payments on time.

How does Affirm Work?

Affirm follows a similar process. You can download the app to your phone or use the solution online to make payments at your favorite online stores. There are two options for how you pay with Affirm, however. You can either make four interest-free payments every two weeks, without impacting your credit score, or you can choose monthly payments, which might be better for big-ticket items.

Affirm offers loans up to $17,500, and the terms usually range from three to 12 months if you’re going for the “monthly payment” options. However, it is possible to get longer loans in some cases. Your term length will change depending on the store and your credit profile.

One good thing about Affirm is that many merchants have already implemented the technology into their checkout, so you can simply choose the payment option when you’re shopping as normal. You can also choose the exact payment option that works for you. If you can’t find the affirm checkout in a store, you can try the company’s browser extension.

Affirm vs Afterpay: Credit Requirements

Although Affirm and Afterpay, like other BNPL solutions, are a little different than simply taking out a credit card or loan, you’re still essentially borrowing money from a company. This means you may need to have a credit check to ensure you’re capable of paying off what you owe.

The good news is if you pay what you borrow back on time, you shouldn’t see any negative repercussions in your credit score. Affirm uses a soft credit check to prequalify you and determine whether you’re suitable for a loan. With a soft credit check, your score shouldn’t be affected.

Affirm may, however, report loans to Experian, and delinquent payments will have an impact on your credit. Affirm will not report a loan if it’s a 0% and includes biweekly payments. If you were only offered a single option at the checkout of a three-month payment with 0% interest, you also won’t need to worry about a credit report.

Afterpay (Clearpay) doesn’t perform credit checks, which means you don’t need to worry if you have a bad credit card rating. Anyone over the age of 18 is eligible to open an account – but that doesn’t guarantee you’re going to be approved. Afterpay also doesn’t have an impact on your credit score or rating, and there are no reports for late payments – though this doesn’t mean you shouldn’t be paying on time, as there can be repercussions to late payments.

While no credit check may be appealing to some people, it’s also somewhat worrying, as credit checks are how credit providers ensure you’re capable of paying back a loan. It’s also worth noting you may have unpaid loans reported to the credit bureaus after a certain time if you don’t repay what you owe, so be careful.

Affirm vs Afterpay: Interest and Fees

Interest and fees are some of the biggest concerns for anyone seeking a Buy Now Pay Later Service. The good news for anyone hoping to use a BPNL like Affirm, Klarna, AfterPay, or Sezzle, is interest fees are kept to a minimum. You won’t have to pay an interest rate if you stick to the agreement of your original payment plan and make each installment payment on time.

However, there are potential late fees to keep in mind if you don’t stick to the rules. Afterpay charges around $10 for late fees if you have an order value of less than $40 upfront. If the order price is more than $40, you’ll pay 25% of the installment price. The late fee gives you another 7 days to pay what you owe, then another $7 is charged to your account.

Keep in mind, late fees can impact your credit history too. Affirm, on the other hand, does not charge any late fees. Instead, the company says you can contact them to arrange a repayment if you can’t afford what you owe.

Affirm will only charge interest when you access one of its longer-term loans. The interest rates here can range from 0% to 30%, but once again, late payment fees don’t seem to be an issue. You can simply schedule your payment when you have the money available.

Affirm vs Afterpay: Mobile App

One of the things making BNPL solutions so appealing, is how easy it is to shop in e-commerce or offline stores and get a great deal. You can download both the Afterpay and Affirm apps from the Google Play or App store for free, and they’ll both help to enhance your purchases.

With Affirm, your app will give you an ecosystem where you can check your payment schedule, update personal finance information, and even apply for loans. You can also shop directly through the app to find deals from partnership companies like Peloton, Walmart, and Amazon.

Afterpay’s app is similarly easy to use, with a convenient interface where users can easily track potential purchasing options and sales. After downloading the app, you’ll set up an Afterpay card, which you can add to your Google Pay or Apple wallet to use online, or at an offline point-of-sale.

Afterpay’s app will give you an insight into your repayment schedule, upcoming refunds, and other information. What’s more, like with most BPNL services, you can also shop directly through the app.

Interestingly, one of the things which sets Affirm apart from other credit card companies and BPNL financing options, is it allows you to create a savings account. The savings account allows you to access your own debit card and collect money with no minimum deposit requirements or fees. You can transfer money to and from the account with ease, but you’ll only be able to conduct up to 6 transfers per month, so keep this in mind.

It’s also worth noting that Affirm loans are an option through the app, whereas Afterpay doesn’t offer complete loan products yet.

Affirm vs Afterpay: For Businesses

It’s easy to talk about the benefits Affirm and Afterpay offer to consumers when it comes to reducing the initial purchase price of an item or service. However, it’s also worth noting there are advantages for merchants too. When companies partner with BNPL services like Affirm and Afterpay, they can often attract a wider range of customers.

When you partner with either Affirm or Afterpay, you join their network of companies allowing customers to shop through installment loans. This basically means you allow the lenders to pay the full price of the product for your customer (minus the first payment, which is paid by the consumer themselves). The lenders give you the cash straight away, so you don’t miss out on anything.

For millennials and younger shoppers, a wider range of payments for both larger and smaller purchases can be extremely appealing. You can offer Affirm or Afterpay as shopping options alongside PayPal, Credit card, debit card, and other payment options at the time of purchase, and potentially earn more conversions.

However, there are fees to consider when you partner with Affirm or Afterpay. Afterpay will charge each store a 30 cent flat transaction fee for every purchase, plus a commission cost which is dependent on how much you sell. Affirm also sets a transaction fee and a merchant discount rate of around 5.99% with each purchase. There are no annual fees or integration fees.

Affirm vs Afterpay: Customer Service

Affirm and Afterpay are both relatively easy-to-use solutions for businesses and consumers alike. For a customer, all you really need to do is download an app to start shopping. Merchants do have a little more work to do to get everything set up but Affirm and Afterpay integrate with most leading website builders, to make life a little easier.

If you do have problems with your service, you can contact Affirm via email, or over the phone. There’s also a helpful knowledgebase where you may be able to find answers to additional questions.

Afterpay offers phone and email support too. However, some consumers do say the Afterpay service is a little slow when it comes to getting back to customers.

Affirm vs Afterpay: Which is Best?

There’s no one-size-fits-all when it comes to buy now pay later services. Both Affirm and Afterpay have a lot in common, offering convenient tools for those in search of more flexible payment options. However Affirm offers a much wider range of services, including savings accounts and loans, if you’re looking for flexibility.

Rebekah Carter

Rebekah Carter is an experienced content creator, news reporter, and blogger specializing in marketing, business development, and technology. Her expertise covers everything from artificial intelligence to email marketing software and extended reality devices. When she’s not writing, Rebekah spends most of her time reading, exploring the great outdoors, and gaming.

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