The “buy now and pay by installments” model has become popular in the world of eCommerce. As a result, retailers in Tasmania are jumping on board these new services to help reduce the barrier of affordability for customers who may want or need the products today. While the model has its benefits, it does not come without some risk. Not only that but not all lay-buy services offer the same features. The two major players in the e-Com lay by space are AfterPay and ZipPay.
To the customer's point of view they look the and act the same, however, for the small business, their features do differ. For a small business, these differences can be significant enough to affect your bottom line. How, then, should you choose between the two? What should you know about these services before you make your choice?
Continue reading to find out how AfterPay and ZipPay measure up to each other.
There is No Such Thing As a Free Lunch
So how do these services make money? Moreover, what are the costs of implementing one of these “buy now pay later” models for your business? Let’s take a look at the costs of using AfterPay and ZipPay.
The more expensive of the two. Merchants are charged 30 cents plus commission for every transaction they make via AfterPay service. The commission ranges from 4 to 6 percent. For small business this skews to the higher end.
Although AfterPay is a lay-buy service, you receive immediate payment minus the commission and flat fee of 30 cents to your nominated account. The caveat though is Afterpays liberal use of the term “immediate” payment is not immediate. The company can take up to 48 hours to compensate the merchant for the transaction.
Merchants who use ZipPay pay 15 cents plus commission for every transaction that is made via the lay-buy service. This commission ranges from 2 to 4 percent.
So ZipPay wins out when it comes to Merchant Fees
Like AfterPay, ZipPay compensates retailers immediately despite offering lay-buy services. This time around, the term “immediately” is a little more literal. Merchants receive payment every day at four o’clock in the afternoon.
|Cost||30 cents per transaction plus commission||15 cents per transaction plus commission|
|Commission||Ranges from 4 to 6 percent||Ranges from 2 to 4 percent|
|Merchant Payments||Merchant recieve payment up to 48hrs after the transaction||Merchants recieve payment every day at 4pm|
So that’s it guys stop reading ZipPay is the winner right? Not just yet let’s delve a little further into the various features these guys offer.
Will it work on my Website?
Development can be expensive, time-consuming and depending on your platform can quickly blow out in cost when it comes to adding one of these payment services. From a developers point of view when looking at a new feature like these lay-buy services compatibility is a huge factor when it comes to recommending to a client which of these services would best suit their e-Commerce site.
When choosing between AfterPay and ZipPay, you might run into this problem as well. So who’s got better support across the myriad of e-Commerce frameworks out there?
AfterPay may be the more expensive of two, but it plays well with many platforms. According to Afterpay’s website, out of the box it supports “ready to go plugins” for Magento, WooCommerce, Neto, Shopify, Island Pacific, Infinity, Futura4Retail, and Commerce Vision. It also offers “developer documentation, technical support for initial integrations and ongoing maintenance if and when you need it.”
So a cheaper service will provide less convenience right? … Well, yep this is true
ZipPay is compatible with Shopify, WooCommerce, Magento, BigCommerce, and Neto. So not quite as an extensive range of out of the box support.
That is not to say, ZipPay isn’t willing to work with you if you don’t have the right platform. The company encourages retailers to contact its team of “dedicated integration specialists.”
But a solution to your particular e-commerce site may or may not be an easy journey.
So What's The Risk?
You receive all of the money for the transaction almost immediately. However, customers haven't been fully charged at the time of purchase.
How protected are you when a customer fails to make their payments?
Simply stated, there is no risk to using AfterPay. Once a transaction has been completed, the customers are out of your hands. You receive your money and fork over the commission and flat fee of 30 cents.
The customers are then left to deal with AfterPay. They make all of their payments to the lay-buy provider according to the terms both parties agreed upon. If the customers fail to pay, you are not held responsible in any way.
ZipPay, like AfterPay, is free of risk for merchants. Customers make transactions, you receive your money and pay the agreed upon amount, and the customers deal with ZipPay from thereon out.
So no matter which you choose, there is minimal risk.
So Who Do Customers Want To Checkout With?
As a small business or us as web developers, we must consider how the lay-buy service you choose will affect your customers and their perception of your business. This isn’t limited to just the checkout process; what about the entire experience, from how each of these services manages each installment right up to the final transaction.
AfterPay functions a bit like a credit line for customers. They can use it to buy products and pay the money back later.
To create an account all you have to do is provide a valid email, phone number, DOB and postal address. Once your account is created you enter your credit card details, and you are off!
A customer doesn’t have any flexibility to change the instalment schedule at all, with the 4 payments being made over an eight week period. The first instalment is taken on the initial purchase and if they fail to make a payment for any reason, they are charged a late fee.
Needless to say, AfterPay isn’t ideal for customers who need a bit more time to pay back any borrowed money or want the flexibility to decide when their instalments are made and what amounts to pay off.
One of the main advantages of AfterPay is that the instalment amounts are clearly indicated on key pages, such as the product detail, cart and in the checkout. This makes it clear to the customer what they are committing to up-front and the number of repayments they need to make. The client won’t really need to login to their Afterpay account either, as the repayments are locked in once the purchase is made.
ZipPay gives customers a credit line of up to $1,000 dollars. Unlike AfterPay, ZipPay allows customers much more time to pay back what they’ve borrowed. The payment schedule is also more flexible, ranging from weekly to monthly.
If customers have an outstanding balance at the end of the month, they must pay a $5 service fee. They must also pay back at least $40 dollars each month.
ZipPay is a good bet for those customers who will need more time to gather up the money for their purchases. As mentioned above, because the instalment schedule can be decided by the customer, there is no mention of the installment amounts with ZipPay. While this provides greater flexibility for the customer, it’s not as noticeable how the payments will work, which may impact conversion rates. One thing we were impressed with when creating an account, is the ability to log in or create an account with your Facebook or LinkedIn credentials.
So Who Do You Choose?
One size doesn’t fit all, and in this case, it depends on specific needs of your business and the technology its built on.
Minus a few differences in the post user experience and how installments are communicated during the checkout process, we don’t believe that either option will lose you the sale. Instead, it would be more damaging for a retailer to not offer any sort of “buy now pay later” method at all.
Depending on the set-up of your business, another important consideration should be what these companies are offering in terms of in-store capabilities. In the ideal world, customers should be able to use the one account for lay-buy purchases online and offline. Out of these two providers, ZipPay appears to have a more comprehensive offering, supporting POS support for systems.