Short answer: Afterpay makes money mainly by charging merchants a fee for each transaction processed through its platform, and by collecting fees from consumers for late payments. It does not charge interest or fees to customers at the point of purchase, but it may levy late fees when payments are overdue. Additional revenue can come from advertising or promotional partnerships with retailers. Details

• Merchant fees: The core revenue comes from merchants. Afterpay charges a fixed per-transaction fee plus a percentage of the sale amount. This typically includes a small flat fee (e.g., around $0.30) and a percentage in the range of a few percent (commonly cited around 4–6%), with the exact rate depending on factors like order value and merchant volume. These fees are the primary source of Afterpay’s income, and they scale with the size and number of transactions processed through the platform. [sources describing merchant fees and structure are widely reported in analyses of BNPL business models, though specific rates can vary by market and time]
• Late payment fees: Consumers who miss a payment deadline may be charged late fees. This provides an additional revenue stream, though the amounts and applicability vary by jurisdiction and program terms. The company emphasizes no interest on the installment plan itself, but late fees can contribute to overall revenue. [reports and explainer content note late fees as a component of revenue]
• Other monetization channels: In some markets, Afterpay’s business also includes related revenue streams such as advertising or promotional arrangements with retailers, and the operations of its international subsidiaries (such as Clearpay in the UK) which follow similar monetization patterns. [commentary on ancillary revenue avenues appears in several analyses]

Context and caveats

• Afterpay’s model centers on increasing merchant sales by providing installment payment options, while transferring the credit risk and collections to Afterpay itself. The incentives align toward expanding merchant adoption and consumer usage, which in turn drives the merchant-fee revenue base. [typical explanations of BNPL risk transfer and merchant benefits]
• Details like exact fee schedules and late-fee amounts can vary across countries and over time, so for precise figures in a given market, refer to regional disclosures or merchant agreements. [acknowledgement that rates differ by market]

If you’d like, I can pull up current market-specific breakdowns or summarize recent investor-focused disclosures to show how those revenue components have trended.