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How does Zip Money differ from Afterpay?
Buy Now, Pay Later (BNPL) services have become the go-to borrowing option for many Aussies, and many providers have rushed into the BNPL market. However, established providers Afterpay and Zip Co remain the preferred choice of many BNPL customers in Australia.
Zip Co offers two options: Zip Pay, for purchases less than $1,000, and Zip Money which lets eligible customers borrow more than $1,000 but typically less than $5,000. If you choose Afterpay, you may qualify to borrow only $500 or less as a new customer.
Still, the amount can increase after you use the service for some time and repay outstanding debts on time. Before signing up for any BNPL service, you should check not just the spending limits but also the fees, interest, and borrowing terms.
How do you compare Afterpay vs Zip Money?
How much you can spend
Start by checking how much you may be able to spend and will need to repay against your budget and spending habits.
- Afterpay may offer customers an initial purchase limit of $500.
- Zip Money may offer customers $1,000 - $5,000 limits on purchases.
Your Afterpay transaction limit may increase if the information the provider collects about your spending and borrowing patterns suggests you have a higher spending capacity. Still, that original smaller amount may help you control spending. Zip Money may also allow you to borrow more after using the service for at least six months.
While Afterpay doesn’t necessarily inform users about their increased spending limits, it may soon need to issue ‘explicit instructions’ before increasing spending limits to ensure the product remains suitable for respective users.
Repayment structures
As for repayments, you have to repay your Afterpay debt in four instalments spaced two weeks apart, starting from a down payment of 25% of the amount you spend, but you may not need to pay any interest on the amount.
Zip Money offers flexible repayments, meaning that you can choose your repayment schedule and pay a suitable monthly amount as long as it exceeds the minimum specified amount, usually $40.
Also, you likely won’t incur any interest on the amount borrowed if you repay it within the interest-free period. This can vary between three and 36 months, depending on where you spend your money. If you still have an outstanding balance after the interest-free period, you’ll have to pay interest at the standard annual rate.
How you can repay
Afterpay allows you to repay your debt using a credit or debit card. This means that if you were to link your credit card to a purchase and did not meet your regular payment instalments, you could be charged interest for your purchase via your card issuer.
In contrast, Zip Money debts cannot be paid using a credit card. You can use a debit card or make the payment from your bank account.
See the table below for a more detailed comparison of Afterpay and Zip Money features.
Afterpay | Zip Money | |
Spending limit & criteria | About $500 | Typically $1,000 - $5,000, based on how long you’ve been using the service |
Repayments | Four fortnightly instalments | Flexible monthly repayments with a specified minimum amount |
How to repay? | Debit or credit card | Bank account or debit card |
Interest | No interest is charged | Three-month interest-free period, but some retailers may offer up to 36 months; Interest is charged at the standard annual rate on the outstanding balance after the interest free period |
Fees and other charges | A late fee is charged if you miss any repayments | An establishment fee is charged at the time of purchase and a monthly account fee is charged as long as the debt is outstanding |
Is there a difference between shopping with Afterpay vs Zip Money?
If you’re eligible to use Afterpay, you’ll need to create an account using their mobile app, set up an Afterpay Card, and link it to your digital wallet to pay for in-store purchases. If you’re shopping online with a store that accepts Afterpay, you may not need to create an account first.
Note that even if you qualify to use Afterpay, your purchase may only be approved if you meet certain criteria. This could include the balance available on your Afterpay Card, the value of your purchase, and the number of Afterpay debts you still owe.
You can use Zip Money to pay for purchases at physical stores and online. But the payment method differs from Afterpay in that the single-use Shop Everywhere card linked to your Zip Money account can only be used to pay for shopping at stores that accept Visa payments.
When shopping at physical stores, making payments using Zip Money requires downloading the app, setting up your account, generating a barcode and getting it scanned at the store’s checkout counter.
You may find either Afterpay or Zip Money convenient depending on factors like what you’re shopping for and the store you plan to buy from. Still, you should remember that both are effectively loans you need to repay, preferably without incurring interest.
Taking on too many debts, even from BNPL service providers, and missing repayments can affect your credit score and make it more difficult for you to access other kinds of credit later.
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