Afterpay is a booming BNPL (buy now, pay later) platform that, as the term suggests, lets shoppers purchase and receive items that can be paid for later, usually in installments.
The company, headquartered in Melbourne, Australia, was founded in 2014 by Nick Molnar and Anthony Eisen. Today, Afterpay has a strong presence in Australia, the US, and the UK (where the platform is still called Clearpay).
Afterpay is known for financing short-term installment plans, usually based on a 4-time repayment schedule. The first installment is paid at the point of sale, and the rest will be paid every two weeks. The credit limit is set at $600 initially, which may increase when customers pay loans on time.
Like other BNPL platforms, Afterpay doesn’t charge interest. However, additional fees are imposed for late payments. While many BNPL competitors conduct credit checks before approving a loan, Afterpay is famous for its relatively easy approval since it doesn’t check the customer’s credit score.
In addition to its BNPL service, Afterpay has launched its own digital card, which can be easily generated through the Afterpay app. Customers who use the Afterpay Card can now shop in-store and connect the card to various digital wallets such as Apple Pay, Google Pay, and Samsung Pay. In the app, customers can also browse through Afterpay’s partner merchants.
Molnar, one of the company’s co-founders, has been involved in many ventures since his childhood. Aside from his family’s jewelry business, Molnar ran several merchandising businesses and worked with many suppliers from Japan to the United States.
On the other hand, Eisen worked for an investment company back then. Living just a few blocks away from each other, the two eventually shared casual talks, which led to the concept of founding a BNPL company. Many BNPL giants were already in existence at the time, but they had not yet entered the Australian market. So, when Afterpay first launched, the competition wasn’t as fierce.
The following years were a period of growth for Afterpay. In 2016, two years after its inception, Afterpay became listed on the Australian Stock Exchange, raising over $25 million. Afterpay was purchased by Block Inc. for a whopping US$29 billion five years later. The success of Afterpay inspired a surge in BNPL on the ASX and the emergence of several “buy now, pay later” platforms in Australia.
In 2017, it completed a merger with the payment processor, Touchcorp, granting the latter 26% ownership. And a year later, Afterpay acquired 90% of the UK BNPL, Clearpay.
According to the company’s annual report in 2021, Afterpay earned AU$924 million in revenues, financing more than AU$19.7 billion worth of transaction volume. During the same period, Afterpay reported having about 10 million users, 55,000 partner merchants, and over 1,300 employees across Australia, Canada, France, New Zealand, the UK, and the US. Currently, Afterpay is valued at $16.97 billion.
The methodology by which competitors of Afterpay are ranked is based on various data points. Information such as the revenue generated, the number of employees, the number of available countries, the number of partner merchants, the companies’ current valuation (enterprise value), and anything else relevant is being taken into account.
This analysis, to ensure comparability, only looks at the BNPL competitors of Afterpay. Therefore, competition in its digital card and online shopping lines is not considered (although some below-listed companies also operate in those industries).
Additionally, companies owned (partially) by Afterpay are included. Afterpay, for example, is a Visa partner but continues to compete with Visa’s BNPL line. In the case of Clearpay, however, the two stopped competing after the acquisition in 2018. The same can be said for Indonesia’s Empatkali, where Afterpay invested but did not compete.
Lastly, this analysis does not include indirect competitors of Afterpay. Examples would be traditional lending institutions, credit cards, digital wallets, and BNPL companies that operate outside of Afterpay’s territories, including Australia, Canada, France, New Zealand, the UK, and the US.
So, without further ado, let’s take a closer look at the top 9 competitors of Afterpay.
Headquarters: Stockholm, Sweden Founder(s): Sebastian Siemiatkowski, Niklas Adalberth, Victor Jacobsson Year Founded: 2005
Klarna is a BNPL company with a strong presence in Europe. The company started as an entry in a business competition in a school in Sweden, with its founders’ hopes of winning enough money as capital for the business. Unfortunately, the concept behind Klarna wasn’t enough to impress the judges.
However, Klarna seemed like it was meant to come to life because, in the same year, Klarna’s founders were able to gain funds and partnerships to start the business. The first Klarna transaction occurred in April 2005 in Pocketbukken, a bookshop in Sweden. Roughly a year after that, Klarna was already a profit-earning business.
In 2010, it became the first European tech startup in which Sequoia invested. Five years later, the company joined Mojang, Skype, Spotify, and King as the only Swedish companies to be valued at $1 billion without being listed on the stock market.
Like other BNPL platforms on the list, Klarna lets its customers divide bills into four installments. The credit terms can range from 14 days to 3 years. Klarna also launched its own credit card in Sweden to make shopping easier. The Klarna card was gradually introduced across Europe and the US in the following years.
Klarna and Afterpay require a 25% down payment, with the rest of the bill due every two weeks. However, unlike Afterpay, Klarna does a soft check in the customer’s account, although the late payments’ fees are cheaper than Afterpay. Klarna users can also choose to pay in one month or finance for six months.
Both companies are available in Australia, North America, and some parts of Europe, but Klarna tends to focus on Nordic countries, while Afterpay is more prominent in Australia and New Zealand.
In 2021, Klarna reported 147 million users shopping at 400,000 partner merchants worldwide. According to Klarna’s LinkedIn page, the company employs over 6,000 people. With an $80 billion transaction volume, Klarna reported $1.6 billion of revenues. The latest estimates say Klarna is worth around $6.7 billion now.
Sources: Klarna, Klarna Annual Report, Reuters
Headquarters: Sydney, Australia Founder(s): Larry Diamond, Peter Gray Year Founded: 2013
Zip Co Limited, formerly ZipMoney, is one of Australia’s leading BNPL platforms. It only took three years for the company to be listed on the Australian Securities Exchange, which funded the company with $5 million in additional cash. In 2016, Zip purchased the budgeting platform Pocketbook for $7.5 million but later shut it down due to a lack of user engagement.
In 2018, Zip made its app available on Google Play and the Apple Store. Currently, these sites show that Zip has over a million downloads. In 2019, Zip bought PartPay, a BNPL company from New Zealand, for $296 million.
A year later, the company also acquired QuadPay, bringing the company’s total valuation to $1 billion. This transaction positions Zip to compete with Afterpay in Australia and other US competitors. It appears that younger shoppers seek simple alternatives to high-interest credit cards.
Zip is also based on a four-installment plan, which is paid in six weeks. But unlike Afterpay, Zip prefers savings account details over credit or debit cards when signing up. Also, Zip lets customers choose when to repay the installments—weekly, fortnightly, or monthly. Late fees apply, though, when an installment stays unpaid for a month.
Zip reported around $4.02 billion of transaction volume and roughly $278 million in revenue. They have over 1,500 employees, 51,000 partner merchants, and 7.3 million users in the US, Australia, Canada, Czech Republic, India, Mexico, Philippines, Poland, New Zealand, UK, UAE, Saudi Arabia, and South Africa. As of writing, Zip is worth $4.22 billion.
Sources: Business Wire, Crunchbase, Moneymag, PYMNTS, Smart Company, Yahoo Finance, Zip Annual Report
Headquarters: San Francisco, California Founder(s): Nathan Gettings, Jeffrey Kaditz, Alex Rampell, Max Levchin Year Founded: 2012
Affirm founder and CEO Max Levchin is one of the founders of the tech giant Paypal. Known initially as Expedite, Affirm was founded as part of HVF, a startup studio where Yelp, HM Bradley, and other tech companies got their start. In 2013, they rebranded as Affirm.
As with many startups, Affirm also had its own boulders to go through before it became a decacorn company. Before the app’s release, the founders had to manually tap merchants to partner with Affirm. After five years of hard work, they finally released the official Affirm app in Google and Apple’s respective ecosystems.
In 2021, Affirm was listed on NASDAQ for $1.2 billion after it was postponed in late 2020 to give way to a higher share price (after the IPOs of Airbnb and Doordash created a buzz among investors).
Unlike Afterpay, Affirm has no minimum down payment. In fact, customers can have a loan in the app without paying anything at purchase. Affirm hasn’t set a specific credit term, which may vary according to the amount. In addition, loans may also be rejected depending on the amount and credit history. Aside from credit cards, Affirm also offers savings accounts.
However, Affirm is only available in the US and its territories, where the two platforms are in tight competition. Early in 2021, Affirm completed the acquisition of Canadian-based Paybright, allowing it to enter Canada. During the same period, Affirm had over 7.1 million users and 29,000 partner merchants, employing around 2,000 employees.
Affirm also had over $871 million in revenues in 2021, and the volume of transactions reported peaked at $8.3 billion. Currently, Affirm is valued at $12.71 billion.
Sources: Affirm Annual Report, Affirm Help Center, Affirm News, CNBC Disruptor, Wallstreet Journal, Yahoo Finance
Headquarters: Melbourne, Australia Founder(s): Marni Meydan, Yaniv Meydan, Richard Broome Year Founded: 2013
Unlike Afterpay and many BNPL platforms, Openpay is a BNPL company that focuses on larger purchases, including healthcare services, automobiles, and home improvements. Openpay Group also caters to business-to-business transactions, as with its partnership with Woolworths.
Based on the platform’s structure, Openpay appears to target a different market than Afterpay. Afterpay finances short-term BNPL loans, whereas Openpay allows for 2-to 24-month repayments of $50 to $20,000.
Openpay is available in Australia, Europe, and Central America. Although Afterpay dominates most of the world’s territories, Openpay has a stronger presence in Central America, particularly in Mexico.
Openpay is part of a family investment company called Meydan Group. The co-founders, Yaniv and Marni Meydan, work as CEO and director, respectively. With hopes of investing in the fintech industry, the Meydens partnered with Broome, a tech development expert, to make Openpay come to life.
In 2019, after six years of operations, Openpay was listed on the Australian Stock Exchange, raising over $50 million. A year before that, Openpay signed a partnership deal with Alipay, helping the latter build a stronger presence in Mexico. With this, Alipay users in China can send money to Mexican merchants using Openpay.
According to its Fiscal Year 2021 report, Openpay has around 541,000 active customers, shopping at over 3,800 participating merchants. During the same period, there had been AU$339 million worth of transaction volume on the platform, yielding AU$26 million in revenues. Currently, Openpay is valued at $103.41 million. It’s estimated that Openpay has around 160 employees.
Sources: Bloomberg, IG, IT News, Iupana, Meydan Group, Openpay Annual Report, Yahoo Finance
5. CBA StepPay
Headquarters: Sydney, Australia Founder(s): Commonwealth Bank of Australia Year Founded: 2021
StepPay is a “buy now, pay later” service launched by the Australian financial company, Commonwealth Bank of Australia, more commonly known as CommBank or CBA. Like Visa, PayPal, and other financing companies, CBA also established its own BNPL platform to keep up with the ever-changing landscape of financing.
StepPay and Afterpay have some differences, one of which is that StepPay runs credit checks before approving a customer’s loan, while Afterpay doesn’t. Although StepPay offers a lot of generous incentives to faithful-paying customers, they impose additional fees for late payments and disable customers from purchasing another product.
As with many BNPL platforms, StepPay is based on a four-time repayment paid every two weeks. StepPay, like Afterpay, specializes in short-term debts, with credit amounts ranging from $100 to $2,000. The BNPL feature is available in the CommBank app and for all CommBank account holders. Therefore, users are required to create a CommBank account to be able to use StepPay.
CBA also invested $100 million and partnered with StepPay’s direct competitor, Klarna, for a 2% stake. The partnership has no direct relationship with CBA’s BNPL (StepPay) operations.
StepPay is available in all areas where Mastercard, CBA’s card provider, is accepted. With Mastercard’s widespread acceptance, CommBank customers can use it anywhere in the world. CommBank operates in Australia, the EU, New Zealand, North America, the UK, and Asia.
StepPay has only been rolled out in Australia, but further expansion is expected. During StepPay’s pre-launch in August 2021, 86,000 customers signed up for a BNPL account. StepPay is now available to over 4 million customers, although the number of its current users isn’t disclosed yet.
CommBank has not yet disclosed specific financial figures for StepPay as of this writing. But it’s worth mentioning that the company closed the fiscal year 2021 with more than 15 million customers, contributing to AU$24 billion in revenues from banking operations, including StepPay. CommBank’s number of employees was around 49,000 in 2021.
Overall, there’s limited information regarding StepPay’s transaction volume, number of users, and participating merchants. The platform’s parent company, CommBank, is currently valued at AU$292.15 billion.
Sources: CommBank Annual Report, CommBank Banking, CommBank International Locations, CommBank Newsroom, Macroaxis, Savings.com.au
6. PayPal’s ‘Pay in 4’
Headquarters: San Jose, California Founder(s): Paypal Holdings, Inc. Year Founded: 2020
Everyone is familiar with the fintech behemoth PayPal as a major platform for sending and receiving money online. With the record-breaking success and promising future of the BNPL industry, PayPal also felt the need to extend to purchase-financing services, launching Paypal Pay Later in August 2020.
PayPal, like Afterpay, promotes pay-in-four repayment for short-term loans, though PayPal also finances monthly long-term loans. Loans between $30 and $1,500 fall under the “Pay in 4” category, while loans between $199 and $10,000 can be repaid over 6 to 24 months.
In addition, PayPal doesn’t charge additional fees when customers miss a payment. However, since PayPal is only new in the BNPL business, the platform doesn’t cover as many countries and territories as Afterpay. It’s also for this reason that many users find PayPal’s BNPL stricter compared to other platforms.
PayPal’s Pay in 4 is available in the US, UK, Germany, France, Spain, Italy, and Australia. Although there’s no specific number disclosed, PayPal reported that 70% of users in the BNPL’s territories also used the feature in 2021. During the same period, the company’s number of employees was around 40,000.
PayPal doesn’t disclose data about the app’s installment features, so there are no exact numbers regarding their BNPL status to make a meaningful analysis (not to mention that the feature was only recently launched).
In 2021, Paypal earned $25.4 billion in revenues, with over $3.6 billion in BNPL’s transaction volume. They also reported around 1.2 million merchants with PayPal BNPL transactions. Currently, PayPal is estimated to be worth $116.31 billion.
Sources: Business Wire, Insider’s Intelligence, Paypal Annual Report, Paypal Developer, PYMNTS, Yahoo Finance
7. Visa Installments
Headquarters: San Francisco, California Founder(s): Visa Inc. Year Founded: 2019
Visa is another fintech giant that’s been a household name for many decades. Due to the changing picture of the finance industry, Visa decided to provide a BNPL service. Launched in 2019, Visa Installments is only available in limited territories—mainly in the US, Canada, Malaysia, Russia, and Australia—but further expansion is expected.
The BNPL service allows Visa cardholders to purchase items through loans. But unlike using credit cards, Visa’s BNPL lets merchants have the credit available to customers at the point of sale. Customers also don’t need to submit credit checks or applications to Visa.
Qualified cardholders can use Visa Installments to buy items without applying for loans or running credit checks. Visa, like many other BNPL apps, divides bills into four installments. The fact that cardholders can convert credit card purchases into Visa Installment loans distinguishes this platform. Cardholders can also apply for loans before making a purchase.
With that, although Visa Installments only has 300 participating stores as per the 2021 report, customers can buy through installments in more than 100 million Visa partners—provided, of course, that you’re in a Visa Installment-covered territory. As of now, Visa doesn’t disclose data regarding the number of installment users.
Visa also doesn’t provide an official breakdown of the company’s data in each category. As of 2021, there’s a total of $13 trillion in transaction volume, with revenues amounting to more than $24 billion. Visa is currently valued at $466.89 billion and employs more than 21,500 people.
Sources: Payments Drive, Visa Annual Report, Visa Installments, Yahoo Finance
Headquarters: New York City, New York Founder(s): Gil Don, Alon Feit Year Founded: 2012
Splitit is a “buy now, pay later” platform specializing in B2B transactions or those involving business suppliers and merchandisers, marketing itself as “the next step forward in B2B financing.” The company was listed for public trading in 2019 on the Australian Stock Exchange.
As with many rising BNPL companies, Splitit offers interest-free loans to customers, but the period will depend on the agreed terms between the lenders and customers. In addition, Splitit is also distinguished by its relatively safer structure, which involves putting a hold on the buyer’s credit card to ensure safety on the merchant’s part.
Splitit allows users to divide loans into 3 to 24 installments, with the first installment starting at the point of sale. The remainder of the bills will then be deducted from the buyer’s credit card. Splitit would grant you 0% interest if you made no missed payments. Customers, on the other hand, have criticized the app’s speed.
In addition to credit cards, customers are also given the option to pay through PayPal or Splitit’s in-app wallet. The app is currently unavailable on Google Play and the Apple Store. Prospective users can download the Splitit app via SaaS. The app also allows partner merchants to set business hours since they’re involved in deciding on credit terms.
In 2021, Splitit reported a $396 million transaction volume, with revenues reaching around $10.5 million. In addition, the company recorded more than 330,000 active shoppers who transacted with over 3,000 merchants. Splitit was estimated to have had no more than 200 employees during the same period. Currently, Splitit is valued at $167.63 million.
Sources: Cision, Crunchbase, Splitit Annual Report, Splitit Blog, Splitit Shopper, Sydney Morning Herald, Yahoo Finance
9. NAB Now Pay Later
Headquarters: Melbourne, Australia Founder(s): National Australia Bank Year Founded: 2022
Another major Australian banking company, National Australia Bank (NAB), pre-launched its own “buy now, pay later” platform in May 2022. Following CBA’s move, NAB also wants to establish itself amidst the rise of the BNPL industry.
Like other BNPL platforms on the list, NAB Now Pay Later splits short-term loans into four installments. NAB’s BNPL structure has many similarities with Afterpay, but as per the company’s announcement, NAB Now Pay Later only has a credit limit of up to $1,000. In addition, NAB only plans on battling against Afterpay in the Australian market.
NAB Now Pay Later was announced to be launched in July 2022. As of writing, the platform is still open for pre-registration for those who want early access. NAB No Pay Later comes alongside the NAB mobile app. Customers are required to pass a repayment assessment before signing up.
NAB will also conduct a credit check before loans can be approved. Repayments are divided into four installments, with the first payment due at the point of sale. The rest of the loans will then be paid every two weeks. NAB Now Pay Later will be available to NAB customers shopping at any Visa-accepting store.
NAB Now Pay Later is still in its soft launching period, so the data regarding this platform is still limited. The platform is currently being rolled out in Australia, New Zealand, and other NAB territories worldwide.
Sources: 9News, NAB Now Pay Later