What Fees Are You Really Agreeing to When Using “Buy Now, Pay Later” Sites like Afterpay?

Buy now, pay later services have seen a large growth in both popularity and reach in the last two years. These new services enable customers to purchase their products instantly without paying in full. This can then be paid off gradually over a dependant timeframe. The biggest catch that pulls people in is the allure of no interest. What people fail to take into consideration are the costly consequences if you don’t meet these payments or the hidden account keeping fees associated with these contracts.

While it can be very easy to click the “buy now” icon and not read the terms and conditions, this is a vital part of understanding the contract you have just entered. Depending on the service you use, your terms and conditions will stimulate either interest, late payment fees or any other cost that you are legally bound to pay in the event of a default payment. This is due to the nature of the contract you have agreed to by continuing to use the service.

FWe’ve gone through three commonly used “interest free” payment services and assessed their fees, account keeping costs and the consequences of a default payment.


When agreeing to the Afterpay terms of service, you are agreeing to pay off four equal fortnightly instalments. This is done by scheduled direct debits from your nominated card.

So what if you’re late?

Instead of charging interest, Afterpay charge nominated late payment fees. If an allocated payment cannot be processed on the selected date, a $10 late payment fee will apply, and another $7 fee if not paid within 7 days. For orders over $40 which have received continuous late fees, this cost becomes capped at $68 or 25% of the cost of the original order (whichever is less). Your use of the Afterpay system reflects your acceptance of these terms.

Zip Pay:

Zip Pay is a lot more like a credit card. You can place items on your account (up to $1000) and have nothing to pay until the end of the month. At the end of the month, you must pay a minimum repayment of $40. There is also a $6 monthly account keeping fee if you have a remaining balance on your account at the months end.

Further, Zip Pay will charge a $5 late fee if you have not made any payments for more than 21 days. They do not specify how this will increase if payment becomes further delayed.

Ezi Pay:

Ezi Pay advertise themselves as “no interest ever”. This is nice in theory, however, they also have a $35-$90 account establishment fee, a $3.50 monthly account keeping fee and a $2.95 payment processing fee for every payment. This means, regardless of no interest, customers are looking at spending a minimum of $100 in fees over 12 months. This fee information is not overly accessible either, meaning it is likely many consumers would be unaware of these hidden costs.

Ezi Pay distinctively do not state what fees or interest will be associated in the event of a default payment. However, they do state they have the legal right to take legal action against you, should you fail to pay.

Kym Butler, founder of Butlers Business Lawyers says:

“Reading and fully understanding an online contract is vital for customers, especially when online shopping. It is easy to get caught up in the allure of “no interest” and delayed payments when there is no one there explaining the terms and conditions, however, this makes it even more important to understand the terms.”

“When you agree to use online credit companies you are agreeing to a legally binding contract. It is important you read the contract in its entirety, especially the fine print, to decrease your chances of accumulating hidden costs.”

Want to know more about the application of Australian Consumer Law? Looking for an experienced solicitor in Newcastle, Sydney or the Hunter to assist you with a legal matter? Call us on (02) 4929 7002, email us or complete an enquiry form.