Afterpay Fee Calculator

The arithmetic

Afterpay: trading as Clearpay in the UK: charges the merchant a percentage plus a fixed fee, pays the merchant up front, and collects four instalments from the customer over six weeks.

Merchant cost = order × rate + fixed, with the rate typically in the 4% to 6% range depending on volume and category. The customer pays no interest if they pay on time.

How that looks in practice

A $58 order at 5% + $0.30: $3.20 of fee, an effective 5.52%. The merchant receives $54.80 within a day or two and carries no credit risk.

The customer pays $14.50 today and three further instalments of $14.50. If they default, that is the provider's loss rather than the merchant's.

Against a card at $1.98, the premium is $1.22 an order. On a $58 order with $31.90 of contribution that is 3.8% of the margin, meaningful but not decisive, which is why the conversion question is what settles it.

Where this breaks down

The fee is charged on the full order value including shipping and tax in most arrangements, so the effective rate against the merchandise value alone is higher than the headline suggests.

The demographic skew also matters. BNPL adoption is strongest among younger buyers, so the conversion benefit is category-dependent, strong in fashion and beauty, much weaker in categories with an older customer base.

Turning it into a decision

Model it against your specific average order value and contribution rather than against a generic case. At a $200 average order the percentage fee dominates and the case is different from a $58 one.

Then look at whether it is displayed on product pages rather than only at checkout. Most of the claimed conversion effect comes from the instalment price being visible during the decision, not from the payment option existing.

Instalment display and the price framing effect

Showing "4 payments of $14.50" alongside a $58 price changes how the price is perceived, and that framing effect is well documented independently of whether the customer uses the option.

That means part of the value is available without the fee: a business can display an instalment breakdown for its own payment plan, or simply anchor against a lower monthly equivalent, and capture some of the effect.

The honest position is that the fee buys three distinct things: the framing, the credit risk transfer, and access to customers who genuinely cannot or will not pay in full. Only the third is unavailable any other way, and how much of the conversion uplift comes from it is the number worth measuring before committing to the rate.

Because the merchant fee is typically charged on the full order including shipping and tax, the effective rate against merchandise value alone is higher than the headline.

On a $58 order with $9.85 of shipping and $5.22 of tax, a 5% fee on the $73.07 total is $3.65 rather than $2.90, an effective 6.3% against the merchandise value that actually carries the margin.

Buy now pay later fees run well above card processing, commonly 4% to 6% plus a fixed amount, and the case for accepting them rests on incremental conversion and larger baskets rather than on cost. The honest test is whether those effects are real for your catalogue, which requires comparing order values and conversion with and without the option rather than assuming the published uplift figures apply.