With the recent introduction of “buy now, pay later” (BNPL) solutions in Australia, many businesses are now scrambling to integrate these programs with their online front. While these services can be very beneficial for increasing sales revenue, there are now enough options out there that merchants can be confused as to which would best integrate with their business. This article will analyse the different “buy now, pay later” programs that are currently operating in Australia, with a detailed breakdown of each service.

Why integrate “Buy Now, Pay Later” services? 

Layby payment options have existed for a long time in brick-and-mortar stores, but this often carries significant risk for the retailer. This is where BNPL services come in: companies such as ZipPay provide customers with an alternative payment option: they can decide to pay for their online purchases over a period of time. For example, sites like AfterPay Australia, customers pay with fortnightly instalments. These services are usually integrated with your online store, with the option to use them at checkout.

The main benefit of such services is that they have the potential to substantially increase your sales revenue. As has been the case since the advent of e-Commerce, the more checkout options are available to the customer, the better your web conversion rates will be. Compounding on this simple reason is the fact that these new BNPL payment options can lead to a significant difference in a customer’s purchase decision – many merchants who have integrated AfterPay have seen an increase in their Average Order Value. At the same time, these service providers take on the risk for the timed payments, and charge the merchant a small fee for their trouble.

Afterpay vs zipPay vs zipMoney vs OpenPay vs Sezzle

With that in mind, now comes the tricky part for many merchants: deciding which service to use. Understanding the pros and cons of each service is crucial, as each service has differences that make the choice significant enough to affect your online business.

 At the moment, there are five companies offering Buy Now, Pay Later solutions in Australia:

• Afterpay
• zipPay
• zipMoney
• OpenPay
• Sezzle

Afterpay

Afterpay gives customers the option to pay two weeks later, and in four fortnightly instalments – the first instalment payment is immediate for first-time users and for orders amounting to $500 or more. Instalments are charged directly to the customer’s credit/debit card, and Afterpay charges a $10 late fee for instalments unpaid.

Integration

Afterpay offers integration with many e-Commerce back-ends: Shopify, Magento, WooCommerce, Neto, IslandPacific, Infinity, Futura4Retail, and Commerce Vision. Integrating Afterpay with these platforms is relatively easy. For example, integration with WooCommerce simply involves installing a plugin.

After integration, the option to pay with Afterpay appears on your product pages, like this:

In addition, Afterpay has a technical support team of specialists who can easily assist you with integration and maintenance.

Costs

 Merchants

Afterpay charges 30 cents per transaction, plus 4-6% of the order value. This is higher than credit card companies and most other BNPL services.

Customers

On the other hand, customers do not pay any fees or interest for their purchases.

ZipPay and ZipMoney

ZipPay and ZipMoney are affiliated companies that offer very similar interest-free BNPL services, but with some basic differences.

For one, ZipPay functions like Afterpay, charging a small percentage of the total order value to the merchant. The difference here is that ZipPay is designed for smaller purchases (under $1000), while ZipMoney is targeted at merchants and retailers who sell more expensive products and services (such as educational courses, digital cameras, furniture etc). ZipMoney allows for purchases up to $10,000, which is significantly higher than with ZipPay. Therefore, the fee structure and procedure for these two services differ significantly.

ZipPay has no fixed instalment payment plan, which means a customer can choose to pay via weekly or monthly instalments. Customers are required to pay at least $40 a month for their purchases.

Integration

Both ZipPay and ZipMoney are easily integrated with e-Commerce platforms such as Shopify, WooCommerce, BigCartel, and more. In addition, as with most of these new BNPL startups, ZipPay & ZipMoney have a technical support team ready to assist retailers with integration.

Like Afterpay, the option for ZipPay/ZipMoney appears on your product page like so:

ZipPay and ZipMoney: Note the price difference between these two items.

Costs

ZipPay:

Merchants

ZipPay charges 15 cents per transaction, plus a 2-4% commission fee to its merchant, which is noticeably lower than AfterPay.

Customers

ZipPay is interest-free for customers; however, they will have to pay a “maintenance” fee of $5 if they have an outstanding balance at the end of each month.

ZipMoney:

Merchants

ZipMoney has comparatively stringent requirements for merchants – to be eligible, they are required to have had a revenue of at least $500,000 for the last financial year, and must be in operation for 12 months or more. In addition, ZipMoney fees vary based on the interest-free period chosen by merchants. For example: A merchant who chooses to integrate ZipMoney on their webstore with a 3 month interest-free payment plan is charged a 3% fee, and 6 months of interest-free payments would incur a 5% fee, and so on.

Customers

Unlike ZipPay, ZipMoney charges the customer an interest rate for purchases. Also, ZipMoney customers are subject to credit checks, while services like Afterpay do not require any.

OpenPay

Openpay is a relatively new BNPL startup – at the time of writing, their service is offered on a small handful of online retailers. The service shares many similarities with AfterPay and ZipMoney/ZipPay, and can be thought of as having a combination of features of the two. OpenPay has a purchase limit of $10,000, and also allows for a longer financing term of up to 12 months.

Integration

Currently, OpenPay only supports integration with WooCommerce and Magento. Since the startup is relatively new, we can expect integration with more e-Commerce platforms in the near future. From what we’ve found, payment options with OpenPay appear only upon checkout:

Costs

Merchants

Openpay does not reveal the fee structure for their service; at the moment, they determine rates based on the type and size of your business.

Customers

OpenPay offers interest-free payments for customers. However, late fees apply, and customers have to pay a nominal fee of $2-3 for long-term financing options.

Sezzle

Sezzle is a Minneapolis-based company founded in 2016, with their services currently used by around 700 online retailers. In November 2018, Sezzle lined up a $100 million line of credit from investment firm Bastion, so expect further growth from this startup.

Integration

Currently, Sezzle supports integration with Spotify, WooCommerce, Magento, and Salesforce Commerce Cloud, with plans to add Big Commerce and 3D cart to its list soon. At check-out, consumers who are first-time Sezzle users will fill out their details, after which Sezzle will determine their creditworthiness based on the bank account, cash flow, fees charged and so on.

Costs

Merchants

Sezzle charges 6% + 30cents per transaction. For each transaction, the merchant receives the full payment upfront, unless otherwise agreed. As Sezzle is a US-based company, transactions are processed in USD, and currency exchange rates will vary.

Customers

Sezzle offers interest-free payment plans with four instalments; the first payment is charged at checkout, with the remaining payments charged every 2 weeks. However, a $10 fee applies to failed payments, as well as a $5 fee for rescheduled payments.

The Breakdown

Conclusion

At the moment, ZipPay and Afterpay are the most commonly used BNPL services in Australia. While Afterpay charges a substantially higher fee on their services, they feature a wider range of integration options with e-Commerce platforms, and are now accepted at a wide variety of major retailers and webstores, such as Big W and Myer. OpenPay is currently heavily focused on offering their payment plans at physical stores, but this could change soon as they hope to expand their portfolio of online merchants. Sezzle is an emerging player in BNPL services; while mainly used by US-based retailers, Australian retailers could benefit if they are looking to capture North American customers.

With all that has been said, there is no one-size-fits-all solution for your e-Commerce business: this depends on several factors such as your product offering and target market/demographic. We hope this article serves its purpose as a quick primer on this new component of e-Commerce that is quickly becoming essential to improving sales. If you are interested in integrating a BNPL service with your online business, why not contact us today for a free quote and consultation?