Afterpay

What Afterpay is

Afterpay is a payment method customers select at checkout. In the US, the service is also called Cash App Afterpay. It is one branded version of buy now, pay later (BNPL), not a general name for every installment payment service.

For standard Pay in 4 purchases, customers repay in four installments over six weeks. Afterpay makes an approval decision for each order, so selecting it does not guarantee approval. Customers can use it online, and eligible customers can set up the Afterpay Card for in-store contactless payments.

Afterpay can change how customers pay, but your merchant fee still has to earn its place in your margin.

How Afterpay works for your business

After a customer chooses Afterpay and the order is approved, your business fulfills the purchase. Afterpay says online merchants receive settlement funds within days. The customer then makes scheduled installment payments to Afterpay, rather than paying your business in separate installments.

Afterpay states that it takes on credit and fraud risk for the customer's repayment. That does not remove your need to fulfill orders accurately, handle refunds correctly, or keep order records that can resolve customer disputes.

What Afterpay means for your costs

Afterpay charges merchants a fee for offering the service. There is no universal merchant rate in the available US product information, so do not assume a quoted rate from an older article applies to your account. Treat the fee as a sales cost and compare it with the gross profit on orders paid this way.

A larger order does not automatically mean a more profitable order after the merchant fee. Measure Afterpay sales, refunds, and fees together. Compare the resulting cost per completed sale with your other payment methods, and include any change in order size or conversion in the calculation.

Settlement and reconciliation

Afterpay says online settlement is sent within days of order processing. Its merchant help information says US disbursements are made by ACH, with timing based on the agreed reconciliation processing schedule. That means the date an order is approved and the date its funds reach your bank are not necessarily the same.

Reconcile each payout against the orders included, refunds, and Afterpay fees. Use your order records and reconciliation details to identify differences; the product information does not establish one standard Afterpay line name for every merchant statement.

What you can actually change

You cannot set a customer's approval decision or installment schedule. You can decide whether Afterpay belongs in your checkout and track whether its fees are justified by completed, profitable sales.

• Compare Afterpay's merchant fee with gross profit, not just order value.
• Reconcile payouts against approved orders, refunds, and fees.
• Review the share of Afterpay orders that are refunded or disputed.
• Keep Afterpay available only where measured sales and margin support its cost.

1. 01
   Measure net margin. Calculate Afterpay fees and refunds against the gross profit from completed orders paid with the service.
2. 02
   Match each payout. Use the reconciliation details to tie ACH deposits to the orders and adjustments included.
3. 03
   Review checkout results. Compare completed sales and order value with the cost of offering Afterpay before deciding where to keep it.

Frequently asked questions