Afterpay is an Australian fintech company operating in Australia, Canada, the United Kingdom, New Zealand, and the United States. Founded in 2014 by Nick Molnar and Anthony Eisen, the company enjoyed a first-mover advantage in the buy-now-pay-later (BNPL) space. Less than seven years later, the company reached 13.1 million active customers with gross sales amounting to $10.1 billion. Despite its success, some suggest the company has lost its edge in the buy-now-pay-later space with the emergence of several high-profile competitors exerting their influence and giving merchants more choice.
|Competitor||Description||Key Insights||Competitive Overlap||Differentiation|
|Klarna||A Swedish fintech company offering “Buy Now, Pay Later” services globally. Klarna competes directly with Afterpay in the BNPL space.||Klarna provides BNPL services and partners with various online retailers to offer flexible payment options.||Both offer BNPL solutions, allowing customers to split payments, but they operate in different markets and have different retail partnerships.||Klarna’s global reach and extensive retail partnerships.|
|Affirm||A U.S.-based fintech company that offers point-of-sale financing, allowing consumers to finance purchases over time. Affirm competes with Afterpay in the BNPL sector.||Affirm enables customers to split purchases into easy payments and partners with online merchants to offer financing options.||Both provide BNPL solutions, but Affirm focuses on financing and has different merchant partnerships.||Affirm’s focus on financing options and diverse payment terms.|
|PayPal Credit||A service by PayPal that offers credit options, including installment payments. While not exclusively a BNPL provider, it competes with Afterpay in offering flexible payment options.||PayPal Credit allows users to finance purchases and split payments, offering flexibility at checkout.||Both offer flexible payment options, but PayPal Credit integrates with the PayPal ecosystem and has a broader range of services.||PayPal’s established user base and broader financial services.|
|Sezzle||A U.S.-based BNPL platform that allows consumers to split purchases into four interest-free payments. Sezzle competes with Afterpay in the BNPL space.||Sezzle offers split payments and partners with online retailers to provide financing options at checkout.||Both provide BNPL services, but Sezzle targets specific markets and emphasizes interest-free payments.||Sezzle’s focus on interest-free payments and niche markets.|
|QuadPay (Zip)||An installment payment service that enables customers to split purchases into four payments. QuadPay rebranded as Zip and operates in the BNPL space, competing with Afterpay.||Zip offers interest-free installment payments and partners with retailers to provide BNPL options.||Both operate in the BNPL sector, but Zip rebranded to expand its services and global presence.||Zip’s expansion into various markets and broader financial services.|
|Splitit||An international payment solution that allows consumers to pay for purchases with an existing credit card and split payments into installments. Splitit competes with Afterpay in providing flexible payment options.||Splitit enables customers to split payments without the need for a new credit line and partners with online retailers.||Both offer flexible payment options, but Splitit’s approach leverages existing credit cards for installment payments.||Splitit’s utilization of existing credit lines and global reach.|
|Shop Pay Installments||A BNPL service offered by Shopify, which allows Shopify merchants to provide installment payments to their customers. It competes with Afterpay’s BNPL solutions.||Shop Pay Installments integrates with Shopify-powered online stores, offering customers the option to split payments into installments.||Both provide BNPL solutions, but Shop Pay Installments is integrated within the Shopify platform.||Integration with Shopify-powered online stores and ease of use for merchants.|
|Laybuy||A New Zealand-based BNPL provider that allows customers to split payments into six weekly interest-free installments. Laybuy competes with Afterpay in the BNPL space.||Laybuy offers BNPL services in multiple markets and partners with online retailers to provide payment flexibility.||Both offer BNPL solutions, but Laybuy’s emphasis on weekly payments and market presence sets it apart.||Laybuy’s weekly payment structure and global expansion.|
|Openpay||An Australian-based BNPL platform offering flexible payment options, including extended payment plans. Openpay competes with Afterpay in the BNPL sector.||Openpay provides BNPL services and partners with online retailers, offering extended payment terms.||Both offer BNPL solutions, but Openpay focuses on extended payment plans and has a presence in specific markets.||Openpay’s emphasis on extended payment options and market presence.|
|Humm (Flexigroup)||An Australian BNPL provider offering customers the option to buy now and pay later with various payment plans. Humm competes with Afterpay in the BNPL space.||Humm provides BNPL services with different payment plans and partners with retailers to offer flexibility at checkout.||Both offer BNPL solutions, but Humm’s various payment plans and market focus differentiate it.||Humm’s diverse payment options and market presence.|
Zip is another Australian fintech company founded approximately one year before Afterpay. The company offers the interest-free Zip Pay digital wallet with BNPL functionality and also the free budget planner and personal finance app Pocketbook. For those desiring a line of credit for larger purchases, Zip Money is also available.
Zip is perhaps the largest Afterpay competitor in the Australian and New Zealand markets, processing $893.5 million in transaction volume during Q4 FY21 alone. However, Zip also has a significant presence in North America after acquiring QuadPay for $400 million in June 2020.
In March 2021, PayPal announced plans to launch its deferred payment service for Australian merchants. The service, dubbed PayPal Pay in 4, was launched in the US, UK, and France the previous year in response to high consumer demand.
The payment service appears in the PayPal wallet at checkout and eCommerce businesses can also advertise the option using a dedicated button on their website. When it was launched in Australia, PayPal Pay in 4 was immediately available to the more than 9 million PayPal members.
Read Also: How Does PayPal Make Money
Bloomberg reported in July 2021 that Apple was working on a service to let shoppers pay for purchases in installments. The loans would be underwritten by Goldman Sachs Group Inc., a partner of the company since the Apple credit card was launched in 2019.
Apple represents a significant source of competition in the fertile North American market. The tech giant also recently announced it would partner with Affirm PayBright to offer a BNPL solution for Apple device purchases in Canada.
The Commonwealth Bank of Australia
The Commonwealth Bank of Australia is a large multinational bank with business interests across Australia, New Zealand, Asia, the US, and the UK.
The bank launched StepPay in August 2021, a BNPL service for purchases over $100. More than 86,000 consumers pre-registered for the service before it was released in Australia. StepPay can be added to the existing CommBank app or digital wallet on smartphones and tablets.
Splitit is a BNPL service where consumers and businesses can leverage their existing Visa and Mastercard credit cards. Unlike competitor services, Splitit is not new financing. This means customers avoid paying interest because they aren’t required to carry new debt.
Splitit reported a 31% increase in year-on-year merchant sales volume in Q3 2021. Approximately 1.8 billion cardholders now have access to the platform with the company having a presence in over 30 countries.
- Afterpay is an Australian fintech company founded in 2014 by Nick Molnar and Anthony Eisen. The company enjoyed a first-mover advantage in the BNPL space but is now subject to increased competition in the Australian and North American markets.
- Zip and the Commonwealth Bank of Australia are the most significant competitors in the Australian market, with the latter having access to a large user base.
- Tech behemoths Apple and PayPal have also entered the industry, with Apple announcing plans to offer a BNPL solution in the United States and Canada in partnership with Goldman Sachs and Affirm respectively.
Key Highlights of Afterpay’s Competitors:
- Founded in Australia around the same time as Afterpay.
- Offers Zip Pay with BNPL functionality and the Pocketbook app for budget planning.
- Acquired QuadPay to expand into the North American market.
- Major competitor in Australian, New Zealand, and North American markets.
- Has a business model based on products and services.
- Reportedly working on a BNPL service in partnership with Goldman Sachs.
- Partnered with Affirm PayBright for a BNPL solution for Apple device purchases in Canada.
- Strong competition in the North American market.
- Commonwealth Bank of Australia:
- Large multinational bank operating in various regions.
- Launched StepPay, a BNPL service, for purchases over $100.
- Access to a substantial user base and a presence across multiple countries.
- Founded in 2009, offers a unique BNPL approach.
- Allows consumers and businesses to use existing Visa and Mastercard credit cards.
- Does not charge interest or late fees; relies on transaction fees.
- Presence in over 30 countries with a significant increase in merchant sales volume.
Read Next: Afterpay Business Model
Read Also: How Does PayPal Make Money
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