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Afterpay

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  AustriaBargain on 14/06/2023 - 07:31

  The real rewards are the high fees you made retailers pay along the way.

  • 

    Buyer0fBargains on 14/06/2023 - 07:37

    I don’t know anything about the retailer side, but I would love to! I was wondering what the downsides are for vendors and why some choose to offer Afterpay but don’t accept things like American Express (which they claim has high fees but is actually dependent on their supplier)

    • 

      AustriaBargain on 14/06/2023 - 08:13

      The downside for vendors are comparatively massive fees compared to their current card processor arrangements which probably processes their average card at less than a percent.

      The plus side is the store can offer risk free interest free credit, to land sales that otherwise wouldn't have happened in the first place because customer couldn't afford it.

      Of course Afterpay is so ubiquitous that people use it for everything today, so a lot of those sales would have been made anyway. But because Afterpay has become ubiquitous if Big W or whatever didn't offer AfterPay at all to avoid the fees then they would lose money because people would shop at Target instead because Target does offer AfterPay. It's better to pay the fees and get the sale than it is to not get the sale at all.

      And it's not like AfterPay is the only factor here. If most stores didn't offer PayPal they would also lose a lot of sales from customers that only use PayPal, so it's not really fair to compare the high AfterPay fees to the lowest possible bank fees for card processing, you really need to compare AfterPay fees to PayPal's fees, which are also surprisingly high just not as high. Same reason why loads of big stores will eat the American Express fees, because it's the profits from any particular sale will be greater than the fees anyway.

      At the end of the day you just need to remember that all of these services are making banks increasingly irrelevant and are changing the way commerce is performed forever. Paying a few more percent in fees is no problem when your margins are like 10+ times those same fees. It works for small businesses too, even if only one in every three AfterPay sales wouldn't have been made if AfterPay weren't offered then the business still ends up ahead because their margins are so much higher than those fees. Why cry over the 2 in 3 that would have used their bank card anyway when the extra sale more than makes up for it. And even if it doesn't for a particular business, who cares, it's a cost of doing business and consequence of AfterPay becoming mainstream. It's not like 100% of customers use AfterPay anyway, plenty of people still use their bank cards directly with retailers.

      • 

        Buyer0fBargains on 14/06/2023 - 11:06

        Thank you for the insight. I only use it at places that don't accept Amex, or if there is an exclusive offer redeemable by using Afterpay. So ye, my question still comes back to why a store would offer Afterpay and still not accept Amex if the fees would be less on that transaction.

        • 

          AustriaBargain on 14/06/2023 - 11:38

          @Buyer0fBargains: Perhaps the store believes Amex users are used to needing to use another card, but they know that AfterPay users will prefer to use AfterPay and will shop somewhere else to buy the same thing. And maybe not just prefer to use AfterPay, but have no other choice because they don't have the spare cash in their checking account and they don't have or for some reason prefer not to use an actual credit card.

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            Buyer0fBargains on 14/06/2023 - 12:14

            @AustriaBargain: I guess that makes sense