Afterpay is no longer just a "Pay in 4" buy now/pay later lender.
The fintech, a unit of Block, is adding a monthly payment option at the point of sale so users may opt to stretch payments out for specific items for up to a year, the company announced Wednesday.
The new product enables users to borrow $400 to $4,000, double the maximum available with Afterpay's core interest-free loans that users typically repay over six weeks.
Afterpay is now more closely aligned with certain BNPL rivals including Affirm, which has long offered loan terms of up to 60 months alongside its Pay in 4 option. PayPal earlier this year
Raising its loan thresholds could expand Afterpay's market share with online furniture and electronics retailers.
"Afterpay's new monthly payment option gives shoppers a clear view of what is owed at the time of purchase, and that amount won't increase over the course of the payment plan," said Lee Hatton, head of Cash App Asia Pacific.
The move comes as regulators are
In a detailed report, the CFPB itemized its concerns about fintechs' BNPL products, including inconsistent policies and the lack of a system to prevent consumers from becoming overextended with loans from multiple BNPL vendors.
Since launching in the U.S. in 2018, Afterpay has specialized in offering interest-free loans users repay in four equal segments over six weeks. The loans have been a hit with consumers buying lower-cost items like clothing, shoes and cosmetics.
Initially the new monthly option includes loans that run from six months to 12 months for online purchases. The new feature will be available for in-store purchases next year, according to a press release.
Afterpay calculates the interest on each proposed monthly payment purchase, and interest will be locked at that rate for the duration of loan.
Afterpay's APRs for monthly loans could range between 0% and 35%, according to a press release. Afterpay's loans are offered in partnership with First Electronic Bank, based in Salt Lake City. About 90% of Afterpay's transactions are repaid via debit cards, the company said in the release.
When an Afterpay customer misses a payment, the account is blocked from making any further purchases until payments resume.
Afterpay doesn't charge late fees, but it sends users to a third-party collections firm when loans are 90 days past due. Afterpay doesn't report repayment data or collection actions to credit bureaus, according to company information.
Block last year
