Afterpay, Zip and Shop Pay Installments on Shopify in Australia

With buy now pay later (BNPL), the customer splits a purchase into instalments and the provider pays you the purchase amount, less its fee. You get paid even though the customer is paying over time, and the provider carries the repayment risk.

Afterpay's own merchant page claims increased conversion and higher order values, and quotes a Mastercard study and a consumer survey as evidence. Those are the provider's claims and they come from its marketing, so treat them as a starting point and test on your own store. Whether it lifts your sales is something to test on your own store. The cost to you is a fee on every order paid that way.

Afterpay appears at checkout once you have connected your Afterpay merchant account and activated it in Shopify's payment settings. Afterpay's developer guide for Shopify in Australia, New Zealand and the US gives the order of steps.

1. Step 1

   Step 1

   Apply for an Afterpay merchant account and get approved.

2. Step 2

   Step 2

   Follow Afterpay's Shopify link and click Connect to link your Afterpay account.

3. Step 3

   Step 3

   Click Install app to give Afterpay permission to process orders and refunds.

4. Step 4

   Step 4

   Select your Afterpay account's country and verify your identity with your merchant email or your Merchant ID and Secret Key.

5. Step 5

   Step 5

   When you land in Shopify's payment settings, click Activate Afterpay. Leave the test mode box unticked on a live store. Afterpay warns the integration will not work if it is ticked.

Afterpay's merchant fee page says the fee is a fixed amount plus a percentage, and that online and in-store fees can differ. It does not publish the rates. They are in your merchant agreement. We have seen third-party articles quoting a range, but we have not been able to verify one with Afterpay, so we will not print it. Ask for the rate in writing and model it against your margin.

On payment timing, Afterpay says online, it pays you the purchase amount on the customer's behalf, keeps its fee and sends the balance to your account, typically within five business days.

Zip's merchant page says there are no setup costs, ongoing fees or lock-in contracts, and that merchant service fees are tailored to each business and confirmed after sign-up and assessment. It also says merchants are paid the next day in full, minus fees, and that Zip takes on the customer credit and fraud risk once a transaction is approved.

The same page describes interest-free terms of up to 60 months with tiered pricing, which is the longer-term option aimed at larger purchases, and everyday products where fees may be lower. The page does not mention Shopify by name and lists Stripe and Adyen as ways to offer Zip at checkout. So for Shopify, confirm with Zip's partner team which integration they recommend for your store, and what the fees are for your category. Furniture, jewellery and electronics merchants should ask about the longer terms.

Our Launch package includes setting up Afterpay or Zip and the checkout testing that goes with it.

Shopify and Affirm announced Shop Pay Installments for Australia in late August 2026. Per the coverage we read, eligible shoppers can split purchases into fortnightly or monthly payments, choose interest-free or interest-bearing plans, see the total repayment upfront, and Affirm says there are no late fees. Merchants can switch it on from the Shopify admin without extra development.

The lender is Affirm Australia Pty Ltd, which holds Australian Credit Licence 569362, and Shopify offers the product as a credit representative of Affirm. Affirm runs a credit check on each transaction, and approval depends on the shopper.

Things we could not confirm from the launch coverage: purchase limits, what merchants pay, and whether Shopify Payments is required. Look in your Shopify admin for the current terms before you plan around it. It is new, so we suggest treating it as an addition for testing, not a replacement for Afterpay or Zip, until you have seen how your customers use it.

Fees and margin

BNPL fees are higher than card fees. Compare against the Shopify Payments rates in Shopify pricing in Australia, where online cards start at 1.7% + 30 cents on Basic. A product with a thin margin may not carry a BNPL fee. Some merchants raise prices overall, others limit BNPL to higher-ticket items. If you add a surcharge for a payment method, check the rules with your accountant and the provider's terms first.

Refunds and returns

Refunds follow your merchant agreement, and Afterpay has separate help guides for online and in-store returns. Process refunds through Shopify so the provider is told. A refund done outside the system leaves the customer's instalments running.

Messaging and speed

Show instalment messaging on product and cart pages where the provider supplies it, because shoppers decide at the product page, not at the last step. Keep the extra scripts light. Heavy widgets slow pages, and our guide to Shopify speed and Core Web Vitals explains how to check.

Order limits and eligibility

Providers decline some shoppers, and they set limits that you cannot override. Always keep a card option, PayPal if you offer it, and an alternate path for shoppers who are declined.

Accuracy of claims

Describe BNPL accurately. Do not say there is no fee or no interest unless it is true for every shopper and product on your store. The wording on the provider's terms applies, and the Australian Consumer Law bars misleading statements. See our returns and Australian Consumer Law guide.

Australia brought BNPL under credit law in 2025. The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 received royal assent on 10 December 2024, and the new regime started on 10 June 2025. From that date BNPL contracts are treated as credit contracts under the National Credit Code.

• BNPL providers must hold an Australian credit licence with the right authorisations, or have applied and had ASIC accept the application, with transitional arrangements while it is assessed.
• Providers must be members of the Australian Financial Complaints Authority.
• A new category of low cost credit contracts allows modified responsible lending obligations for products that meet prescribed requirements on fees and credit period. BNPL contracts that do not qualify are regulated like other credit.
• The requirement that a charge be made for credit, such as interest, does not apply to BNPL contracts, so a product with no interest can still be regulated.

What does this mean for a merchant? ASIC's page on BNPL licensing does not set out separate obligations for merchants. Merchants appear in the definition of a BNPL arrangement because they supply the goods and a provider pays them. Whether a merchant needs a licence depends on whether it carries out credit activities, which the page does not address, so a merchant that only offers a licensed provider's checkout at its store is in a different position from one that arranges credit itself. Ask a lawyer if you do anything more than accept the provider's checkout.

In practice the change is that providers do more assessment of shoppers, which can mean more declines, and that you should work with licensed providers and keep your own claims accurate. Shop Pay Installments is offered by a licensed credit provider, per the coverage we read, and you can ask Afterpay and Zip for their licence details.

• Shopify Payments for cards, with Apple Pay and Google Pay.
• One main BNPL provider, usually Afterpay or Zip, based on which your customers use and which gives you the better written terms.
• A second BNPL option only if you sell higher-ticket items that suit longer terms.
• Instalment messaging on product and cart pages, kept light.
• A test order for each payment method before launch and after theme changes.

Our Shopify store design work includes this checkout setup, and conversion rate optimisation tests where BNPL messaging pays off. If you want us to set it up, get in touch.