You’ve probably noticed at least one buy now, pay later (BNPL) payment option if you’ve been through an online checkout recently. BNPL has experienced explosive growth recently, accounting for 2.9% of global e-commerce transactions in 2021 alone. There are plenty of options to choose for merchants looking to add this service to their e-commerce site.
Here, we’re taking a closer look at Afterpay, one of the most well-known payment providers, and how its services compare to the way we do things at Splitit. Learn about the key differences between Splitit and Afterpay and how to decide which option (or if having both options) is best for your customers and your business.
How Splitit works
Splitit is the only installment payment solution allowing shoppers to use their existing credit card at checkout, so there’s no need for them to take out an additional line of credit.
With Splitit, customers don’t need to fill out any applications or navigate to a third-party website to get approved. It all takes place in the retailer’s checkout flow just like any other credit card purchase, with one extra step – choosing the number of installments.
Unlike legacy BNPL providers that provide point-of-sale loans, Splitit is a technology platform that works within the existing credit card system. All a shopper needs is a credit card with available balance for the full purchase amount.
On the back end is where Splitit really shines. The platform will trigger a pre-authorized payment for the full amount to ensure the shopper has the means to repay, but Splitit will only charge the card the first installment amount at checkout. Each month Splitit automatically charges the account and reduces the amount of the hold, so shoppers can pay for their purchases in smaller chunks at a pace that fits their budget.
Splitit doesn’t charge the consumer any interest, fees or late payment penalties. If a shopper misses a payment to their credit card, they will just revert back to the terms of the card issuer.
Splitit also works well for larger purchases. Although there are no minimum or maximum limits on purchases with Splitit, the average order value is over $1,000.
How Afterpay works
Afterpay is a buy now, pay later platform that operates with a pay in four model that provides a point-of-sale loan to the shopper. This means shoppers will need to fill out an application, fill in their personal information and undergo a soft credit check before they’re approved for financing. Once approved, customers will link their debit or credit card and choose to make payments automatically or manually.
They’ll make the first payment upfront and follow with three additional payments over the next six weeks.
The amount that customers can spend will vary based on their credit profile and their Afterpay transaction history. If a customer misses a payment, they’ll be charged a late fee, which can be up to 25% of the total order value.
The purchase limits for Afterpay range from $10-$2,000, depending on the shopper’s credit profile. Afterpay’s average order value is $150.
Splitit vs. Afterpay at a glance
For customers
| SPLITIT | AFTERPAY (Pay in 4) | |
|---|---|---|
| Credit check | No | Yes (soft credit check) |
| Tied to credit rating | No | No |
| Interest charged by BNPL | No | No |
| Payment method | Credit card | Credit card, debit card or bank account |
| Credit card rewards captured | Yes | It depends on the card issuer |
| Repayment triggering | Automatic | Automatic or manual |
| Early repayment option | Yes (no fees) | Yes (no fees) |
| Number of Installments | Flexible (equal monthly payments) | 4 payments over 6 weeks |
| Associated fees | None | Late fees up to 25% of the order total |
| Spending limit | Dependent on credit card limit and availability | Depends on credit profile |
For retailers
| SPLITIT | AFTERPAY (Pay in 4) | |
|---|---|---|
| White-label offering | Yes | No |
| Fees for retailers | Up to 6.5% per transaction, plus a flat fee | 4%-6% per transaction, plus a $0.30 flat fee |
| Payout terms | Flexible options, get paid upfront or in line with shopper repayment for a lower fee. | 48 hours after customer payment |
| Purchase Limit | Depends on the consumers available credit limit. Can be set by merchant ( (up to US$65,000 if funded) | $10-$2,000 |
| Obtaining Customer Data | No – does not retain data or remarket to a merchant’s customer base | Yes – Afterpay uses customer data in its Shopping Destination platform |
| In-Store Solution | Yes | Yes (via virtual card) |
| International Capabilities | Global | Australia, United Kingdom, Canada, United States, and New Zealand |
| Key Partnerships | Shopify, SFCC, Wix, Magento, BigCommerce, SAP and WooCommerce | Shopify, Magento, Magento 2, WooCommerce, SFCC, BigCommerce, PrestaShop, and Wix |
| Site integration | Seamless (integrated into retailer’s checkout) | Customers can pay using the app or through the retailer’s site |
A closer look at Splitit vs. Afterpay
When choosing a BNPL platform, retailers should consider what the best options are for their customers, alongside their internal operations and business needs. There are a few key things that will help you decide which platform is the best fit.
Splitit vs. Afterpay: Customer experience breakdown
When considering Splitit and Afterpay in the checkout, the best option for customers really depends on their financial circumstances and preferences.
Existing card-based or finance-based
Splitit is connected to a customer’s existing credit card, and so approval is based on their credit card limit. They’ll automatically be approved if they have enough room on their card to allow an authorized hold for the total transaction value (as long as it’s within the spending limit that has been set by the retailer).
This makes it a great option for people who want to build their credit score and take advantage of credit card points and rewards, but don’t want to accrue interest by placing the total order value on their credit card upfront.
Afterpay conducts a soft credit check to look into a customer’s credit profile to determine whether they’ll be approved and how much they can spend. If they’re approved, they can make repayments using a debit or credit card.
Fees and interest
Both Splitit and Afterpay are free for customers to use – neither platform charges upfront fees or interest, which means that shoppers only pay whatever fees and interest are associated with their credit card (or debit card, in Afterpay’s case).
Customers who use Splitit still benefit from their credit card rewards and points. Afterpay’s integration works differently, and so most shoppers won’t be able to redeem credit card points and rewards when they’re paying through Afterpay.
Penalties
Splitit doesn’t charge any late payment fees. If a customer misses a payment, the pre-authorized funds will automatically be processed after seven days so the entire remaining balance is paid off at once. After that, their account will be clear.
Afterpay charges a late payment penalty of up to 25% of the total order value, which will be triggered every time they miss a payment (after a ten-day grace period). Shoppers who receive a late payment penalty won’t be able to use Afterpay until they’ve paid their fees and are on track with their payment schedule.
Payment periods
Splitit allows customers to create a flexible installment schedule that suits them. They’ll make monthly payments over a set time (up to 12 months) depending on the number of the installments that best fit their budget.
Afterpay follows a six-week repayment schedule – customers will make the first payment upfront, followed by three additional payments at two-week intervals.
Splitit vs. Afterpay: Retailer experience breakdown
The buy now, pay later platform you offer should integrate seamlessly with your business operations, so you can reach your targets and satisfy customer needs today while also scaling towards future growth.
Cost of use
Splitit has a variety of packages that are designed to fit different business needs and goals. Each comes with free set-up and integration and guaranteed full transaction amount. Our sales team can give you a fast quote, get in touch today. These flexible packages are tailored to meet your business needs.
Afterpay operates on a transaction-based model, in which they charge retailers a variable 4%-6% commission rate per transaction plus a $0.30 flat fee.
Merchant payment periods
With Splitit, retailers have the flexibility of choosing whether they want to receive payment upfront or in line with the customer repayment plan, based on the package that best suits their business needs.
Retailers that use Afterpay can expect to receive funds 48 hours after the customer makes a payment.
Site integration
Both Splitit and Afterpay can be integrated with all leading e-commerce platforms, including Shopify and BigCommerce. Splitit also offers custom integration. The Splitit customer experience is seamless – there’s no need for customers to leave the retailer’s site or fill out a long application.
If shoppers choose Afterpay, they’ll usually see a pop-up window where they’ll fill in their personal details for a soft credit check. After that, they’ll find out whether they’ve been approved and, if so, what their spend limit is.
Merchant branded experience
Splitit offers white-label options that allow retailers to incorporate BNPL as part of their organic brand experience. It can be fully integrated into the merchant’s existing checkout flow making it a seamless experience and giving the merchant full control of their customer journey. As Splitit does not capture customer data, retailers also retain full ownership of their customer relationship.
Afterpay doesn’t offer a white-label solution, and so retailers must display Afterpay’s logo and branding throughout their site. Shoppers also need to sign-up to Afterpay either online or via their app, giving Afterpay access to their customer data and the ability to remarket to them.
So – which is better?
You probably know what we’re going to say. With no late fees, an AOV of $1,200+, and a seamless checkout experience for customers, we’re (obviously) confident that Splitit is the best buy now, pay later platform on the table.
However, that doesn’t necessarily mean it should be the only option that you offer to your customers.
In the same way that you wouldn’t choose between accepting only debit cards or only credit cards, having a diverse range of payment solutions allows you to cater to a wide range of shoppers who have different needs.
Splitit is the best solution for customers who are looking for a buy now, pay later solution where they can leverage their existing credit card limit without the risk of added interest or late payment penalties. It empowers shoppers to make larger purchases and have flexibility, while keeping control of their finances, as they can pick an installment schedule that lines up with their budget.
Get in touch with our team to learn how you can diversify your checkout experience and give your customers the option to shop with Splitit.
Got more thinking to do? Explore Splitit vs Klarna, Splitit vs Affirm and Splitit vs Sezzle.
Information correct at time of publishing, source: https://www.afterpay.com