Afterpay vs Openpay: Take the Better Option for Big Savings

What is Afterpay?

Afterpay is Australia’s largest BNPL platform and is widely regarded as an industry pioneer. It allows customers to buy a product in-store or online immediately and pay for it in interest-free fortnightly instalments. Afterpay also offers Money by Afterpay, an app that delivers savings and transaction accounts backed by Westpac.

How Does Afterpay Work?

Afterpay allows users to pay in four evenly-split, interest-free instalments over six weeks, starting at the time of purchase.

Shop online: Choose Afterpay as your payment method at the checkout.

Shop in-store: Tap and pay with your Afterpay Card using Apple Pay, Google Pay or Samsung Pay. You can set up the Afterpay Card through the Afterpay app.

For both online and in-store transactions, Afterpay says it takes the first repayment (usually 25% of the total purchase price) from customers at the time of purchase, and the remainder every two weeks after that.

It also says it sometimes carries out a “pre-authorisation check” by taking a small amount from a customer’s account – up to the value of your first instalment plus 1 cent for online purchases and up to 25% of the value of an in-store barcode plus 1 cent – to make sure the customer’s nominated repayment card is working. Following the check, Afterpay says these transactions will be voided so customers are not charged. Our Online Store also has afterpay option.

Afterpay says it does not do credit checks or report late payments.

What Does Afterpay Cost?

No interest.

$10 late payment fee per instalment, plus a further $7 if the payment is a week overdue. Total late fees on a purchase are capped at 25% of the purchase price of $68 (whichever is less), or a single $10 fee for purchases under $40. 

What is Openpay? 

Openpay is one of the popular financing services that lets you buy now and pay later. Similar to Afterpay, Zip and Humm, Openpay offers interest-free instalments. However, if you miss out on an instalment, there are late fees that may apply. 

Openpay is a buy now pay later (BNPL) service that allows customers to pay for purchases over time, interest-free. Payments can be spread across two to 24 months (depending on the purchase) and repaid over weekly or fortnightly instalments.

Openpay says it focuses on industries such as automotive, healthcare, home improvement, memberships and education. Some of its partners include Bunnings, Bupa Dental and Repco. It also says it targets customers who are of an older demographic.

How Does Openpay Work?

You can shop with Openpay in-store and online at participating retailers. You can find a list of participating retailers on the Openpay website or through the Openpay mobile app.

If shopping in-store, you’ll need to download the Openpay app and show the store staff your barcode or nine-digit Customer ID number at checkout. If shopping online, you’ll need to select Openpay as your payment method at checkout.

Payment plans range between two to 24 months, with values up to $20,000 depending on your circumstances. You’ll be charged the first instalment at the time of purchase. This is usually 20% of the purchase price. You will then be asked to repay the remainder of the purchase in weekly or fortnightly instalments. Openpay says you can also make early repayments via the Openpay app or by calling its customer service team.

How Much Does it Cost to Use Openpay?

Openpay does not charge interest, but it does charge fees in some circumstances. At the time of writing, Openpay says it may charge you a plan creation fee when you establish an Openpay plan, a plan management fee on each instalment you make under your plan and a late payment fee of $9.50 if you don’t pay an instalment on time and it is still unpaid two days after the due date.

Openpay says the plan creation fees and plan management fees may vary depending on factors like the retailer and purchase amount. As an example, Openpay says the following fees apply to purchases made at Bunnings.

Purchase amount up to $1,000 – no plan creation fee, plan management fee of $0.50 per fortnight, paid over two to three months.

Purchase amount between $1,000 and $15,000 – plan creation fee of $25, plan management fee of $2.50 per fortnight, paid over six to 18 months depending on the spend amount.

Excluding late payment fees, Openpay says fees are capped at $200 in the first 12 months of the contract, and $125 each subsequent year. It also says it will disclose all fees to you before you commit to starting an Openpay plan.

How Do I Register for Openpay?

Before signing up for Openpay, it’s important to carefully consider whether it is suited to your financial needs and whether you will be able to make your regular repayments or pay off your balance by the applicable due dates. Keep in mind that there may be fees involved, including if you are late with any repayments.

If you decide to open an account, you can do so through the Openpay app, in-store or at the online checkout when shopping with a partner retailer. Openpay says it will perform an ID and credit check on you when you create an account.

To be eligible for an account, Openpay says you will need to:

• Be 18 years or older
• Provide your full legal name, residential address and date of birth
• Provide a valid email address and phone number
• Provide details of a valid Visa or Mastercard in your name (both credit and debit cards are accepted).
• You may also need to provide a valid Australian photo ID (or New Zealand ID if you are a New Zealand resident).

Does Openpay do Credit Checks?

Openpay says it reserves the right to conduct credit checks on new applicants, and that it may perform a “quick” credit check on you when you create an account. This may include getting a copy of your credit report from a credit reporting body. Additionally, if you request an increase to your initial spending limit, Openpay says it will do a credit check on you if you consent. This will be listed on your credit report.