AfterPay vs PayPal: A Realistic Guide for Merchants

Note that the information about AfterPay and PayPal found in this article was taken from their respective websites on 30 December 2024. This information is subject to change.

AfterPay and PayPal are two distinct leaders in the merchant industry. Both have similar yet unique focuses and are ideal for international money transfers for individuals and merchants. In the digital world, the battle for AfterPay vs PayPal continues to grow.

When it comes to merchants offering some product or service, having the right payment gateway is essential since you’re looking at your subscriptions, and some businesses even want to offer the BNPL option to their customers.

In this article, we will understand the different strengths and weaknesses of AfterPay and PayPal, including their supported markets, payment methods, security, integration, and future-proofing. Moreover, if you’re a merchant, then this comparison will be essential for you.

AfterPay vs PayPal: A Brief Overview

PayPal vs AfterPay are two of the more popular payment solutions catering to specific business needs. The only similarity between both is that they aim to simplify and streamline transactions, which is desirable for every merchant.

First, let’s start with AfterPay. What is Afterpay, and how does it work? AfterPay is a buy-now-pay-later or BNPL service that allows customers to split their purchases into interest-free installments. This appeals to both businesses and customers.

For businesses, AfterPay is perfect for boosting their sales, while for customers, it has an interest-free option, offering affordability and maximum purchasing power. In 2024, the BNPL market alone reached over $500 billion, showing how much in-demand this industry is currently.

On the other hand, we have PayPal, a versatile, quick, and go-to solution for most merchants. PayPal allows seamless payments through credit/debit cards and a few other payment methods, but the best thing about the platform is the PayPal-to-PayPal transfer, which usually requires minimal to no fee.

Businesses and merchants from all over the world benefit from PayPal, and is suitable for individuals, big businesses, and even large enterprises.

While both Afterpay’s and PayPal’s goals are similar, their supported markets and customer base are different.

Supported Markets and Customer Base

AfterPay operates in regions like New Zealand, Australia, the US, Canada and the UK. In the UK, it is known as ClearPay, which operates as a subsidiary of AfterPay. AfterPay focuses on markets with high retail and e-commerce business, which fits perfectly with its BNPL model.

AfterPay has already been integrated into some of the biggest brands, such as IKEA, Expedia, Lululemon, Nordstrom, Petsmart, and more. AfterPay targets a younger shopaholic audience looking for a flexible payment solution.

In contrast, PayPal is available in more than 200 countries and supports over 25 currencies. Thanks to the widespread support that it offers, PayPal is a go-to solution for businesses that are seeking international market access.

However, PayPal goes beyond accepting payments. The wallet is used to facilitate cross-border payments, and its widespread adoption makes PayPal a true payment giant. PayPal has a diverse customer base, from individuals sending money to family and friends and shopping online, to online merchants and businesses who need to pay their remote workforce. Businesses from various business niches are accepted, including non-profits.

AfterPay and PayPal Features

Supported Payment Methods

Afterpay

AfterPay supports credit and debit cards from Mastercard and Visa that were issued from your country of residence. However, users can also use digital forms of payment, including Apple Pay and Google Pay. One con about AfterPay is that it doesn’t accept issued cards from overseas banks and cards issued by other BNPL providers like Zip Card and Humm. Lastly, AfterPay also doesn’t accept direct bank transfers.

PayPal

When it comes to PayPal, you can use any Digital Wallet, PayPal Credit, American Express, Bank Transfers, and even vouchers. Here are some of the options that PayPal supports.

Recurring Payments

AfterPay allows customers to manage installment payments through its app, offering features like viewing payment statuses, updating payment methods, or canceling installments. While ideal for short-term expense management, it is not designed for traditional subscription services with recurring payments.

PayPal provides robust tools for subscription management, enabling merchants to set up recurring plans and customers to manage subscriptions easily. However, its interface and setup process can feel complex to some users, which may create friction for merchants.

In conclusion, AfterPay is tailored for installment payments, while PayPal leads in subscription management despite some usability challenges.

BNPL (Buy-Now-Pay-Later)

AfterPay vs. PayPal Pay in 4

AfterPay and PayPal's "Pay in 4" BNPL services have sparked debate globally. Currently, PayPal’s BNPL options are available in select markets, including the US, UK, Australia, and France. Both AfterPay and PayPal offer buy now, pay later features that operate similarly, allowing customers to split purchases into interest-free installments if paid on time.

One unique feature of AfterPay is its in-store payment option, available via its app or the AfterPay Plus Card, which allows installment payments almost anywhere for $9.99 per month. PayPal offers additional flexibility with extended payment terms of 3, 6, 12, or even 24 months; however, these options typically incur interest or fees.

For PayPal Credit, users benefit from no interest if purchases of $149 or more are paid in full within six months, subject to terms. This contrasts with AfterPay, which remains focused on straightforward installment plans.

Both platforms offer excellent BNPL solutions, with AfterPay excelling in accessibility and simplicity, especially for in-store use. Meanwhile, PayPal stands out with more diverse payment terms, including bi-weekly and monthly options. Choosing between the two ultimately depends on the user's payment preferences and needs.

Security & Compliance

AfterPay is known for providing great security compliance for both customers and merchants. It features PCI-DSS Compliance, which is a set of requirements created by the Payment Card Industry Security Standards Council. Moreover, AfterPay’s AOC or Attestation of Compliance is also available to both merchants and consumers on request.

Similarly, PayPal also has PCI PSS compliance, and they also have multiple guides for merchants and their businesses to get compliant too.

Integration Options

AfterPay can be integrated with some of the biggest e-commerce platforms like Magento, Shopify, WiX, Squarespace, PrestaShop, and more. However, the best part about using AfterPay is its seamless integration with all POS systems for in-store purchases. This is perfect for merchants who have an in-store business as well.

AfterPay can also be leveraged using an NFC solution. AfterPay also provides API integration, making it an attractive option for businesses with proprietary solutions. Moreover, AfterPay also provides SDKs for integrations in mobile apps, making it integratable no matter the platform.

Moving onto PayPal, firstly, it has a variety of ready-made plugins for connections with e-commerce platforms or third-party apps or websites. In addition, APIs are available for customer integrations. It also caters to different marketplaces and accounting systems and even provides in-person payments, PoS terminals depending upon the market, and QR payments like AfterPay.

AfterPay vs. PayPal Fees (*US Pricing)

Afterpay (Varies By Country)

Afterpay does not state pricing openly on their website, however a range of third-party sources suggest fees in a range of 4-6% plus a fixed fee (usually around 0.30 USD).

PayPal (Varies by Country)

PayPal does not charge merchants a specific fee to enable Pay in 4 on their checkout. When a customer uses Pay in 4, the merchant pays the standard PayPal transaction fees for that payment. For example, in many regions, this might be a percentage of the transaction amount (e.g., 2.99%–3.99% + a fixed fee depending on the region and currency). Some examples of the fees are stated below:

For the most accurate and current details on fees and charges, it's best to check PayPal’s website directly for a full pricing breakdown.

Support and Customer Experience

AfterPay has good customer support for merchants overall, and most people have had no issues. They have a full-page dedicated Merchant Support Area where you can provide your specific problem or even email them. Unfortunately, there isn’t a live chat or calling option upfront.

PayPal offers more extensive support options, including a Message Center with an AI-driven assistant, self-help articles, and the ability to contact support via phone, depending on your location. These options provide greater flexibility for resolving issues compared to AfterPay.

Overall, PayPal’s support is more comprehensive and accessible, catering to a broader range of merchant needs, while AfterPay focuses on streamlined email-based assistance.

Final Verdict: Which One is Better?

Both AfterPay and PayPal are good options for what they do. AfterPay is helpful for merchants targeting younger customers by providing them with BNPL solutions. This boosts business sales and enables a whole new customer base to leverage BNPL features.

On the other hand, PayPal is much more versatile and is perfect for various industries, including SaaS, e-commerce, and even for making a subscription-based business. It also has more payment options and supports over 200 countries.

Noda: A Simplified AfterPay and PayPal Alternative

But what if you’re looking for a fresh new approach to payment processing? In that case, Noda offers a versatile alternative to both AfterPal and PayPal. With this open banking platform, customers can now pay you directly from their bank accounts, eliminating hefty processing fees and the need to enter card details.

Our simple checkout gets rid of card networks and makes sure that issues like chargebacks and rolling reserves never happen. Noda supports over 2,000 banks across 28 countries in Europe, as well at the UK, Brazil and Canada.

Moreover, our platform can easily be integrated with Magneto, PrestaShop, OpenCart, and WooCommerce through a simple API. If you’re looking for a simple and future-proof solution to payment processing, reach out to Noda and we’ll be happy to assist you further.