Afterpay vs Zip vs Shop Pay Instalments: Shopify AU

Quick answer: As at 31 October 2026, none of the three publishes its merchant rate for Australian stores, so the honest comparison is on structure, not price. The Reserve Bank of Australia (RBA) put the average buy-now-pay-later (BNPL) merchant fee at about 3.0% in 2025, against roughly 0.8% to 1.0% for Visa and Mastercard credit. In the worked example below, a 4% fee against a 1.7% plus 30 cent card fee pays for itself only if about 5% of BNPL orders are genuinely new, or BNPL orders are about 5% bigger than they would otherwise have been. Get your own rate, test one provider and measure net profit per session, not order value alone; this is general information, not financial advice.

If you sell on Shopify in Australia, “should I add Afterpay, Zip or the new Shop Pay Instalments?” is really three questions. What does a BNPL order cost you compared with a card order? What does the shopper go through to use it? And does the extra revenue cover the fee?

This post answers them from what each provider and Shopify publish, read on 31 October 2026, plus a worked margin example you can rerun with your own numbers. It is aimed at founders turning over roughly $150K to $1M a year, where two or three extra points of fee on a fifth of your orders is a real line in the P&L. (Shopify’s help pages spell the product “Installments”. I use “instalments” except when naming it exactly.)

What the providers publish, and what they do not

I read Afterpay’s and Zip’s Australian business pages, Afterpay’s merchant fees page, Zip’s how-it-works page, Shopify’s Shop Pay Installments help pages and Australian pricing page, and the RBA’s 2021 and 2026 papers on BNPL.

Afterpay sets your rate in your merchant agreement and Zip confirms it after sign-up. Shop Pay Instalments is the same: Shopify says the fee is higher than a normal card fee because it includes the standard Shopify Payments processing fee, and that your exact rate is shown in your Shopify admin. It prints no figure.

That is not a quirk of these three. The RBA’s June 2026 issues paper says BNPL providers typically do not publish the fees they charge merchants, which makes it hard to benchmark them. So treat any line saying one provider charges X% and another Y% as a guess unless it names the agreement it came from.

Merchant fees: what is actually known

Afterpay. The merchant fees page says the fee is a fixed fee plus a percentage of the sale, charged on approved purchases, with amounts in your merchant agreement.

Zip. The business page says there are no set-up costs, ongoing fees or lock-in contracts, and that your fees are confirmed once you complete sign-up. It also mentions tiered pricing for longer interest-free terms of up to 60 months, so ask which Zip products your quoted rate covers.

Shop Pay Instalments. Shopify’s help centre says the fee carries Australian GST of 10%, is not returned when you issue a refund, and is shown in your Shopify admin. There is no cost to activate it.

The public benchmark. The RBA’s 2021 conclusions paper found the average BNPL merchant fee was a little over 4% in the June quarter of 2021, from nine providers, and that fees vary widely. The June 2026 issues paper shows it falling from about 4.5% in 2020 to about 3.0% in 2025, still materially higher than card payments. On the same graph, American Express is about 1.3% and Visa and Mastercard credit about 0.8% to 1.0%. These are averages across all merchants; the 2021 paper added that fees can be much higher for individual merchants, particularly smaller businesses.

Your card baseline. Shopify’s Australian pricing page lists Shopify Payments online card rates of 1.7% plus 30 cents on Basic, 1.55% on Grow, 1.35% on Advanced and 1.15% on Plus (all plus 30 cents). It also lists third-party transaction fees of 2%, 1%, 0.6% and 0.2% on those plans, which may apply when you use a third-party payment provider. I could not confirm from Shopify’s public pages whether that fee is charged on top of Afterpay’s or Zip’s own fee, so check your own Shopify bill.

To find your number: read your Afterpay or Zip agreement, or ask in writing for the percentage, the fixed fee, any online and in-store difference and the refund treatment. For Shop Pay Instalments, Shopify says to go to Settings, Payments, click Manage in the Shopify Payments section, then More actions, Manage payment methods and View payment rates. Then combine the percentage, fixed fee and GST into one effective percentage on your average order.

Getting paid, and who carries the risk

Afterpay’s two pages give different timings, so ask which applies to your store. Get risk allocation in writing in your agreement rather than assuming it from a marketing page.

Approval friction: what your shopper goes through

A BNPL option the shopper is declined for, or has to sign up for mid-checkout, is not the same as a button that works.

Afterpay. Pay in 4 is four interest-free payments over six weeks, first at checkout. Afterpay says every order is assessed, not just the first, and caps late fees at the lower of 25% of the order or $68. Its help centre also describes Pay Monthly at a standard 19.99% p.a., with occasional 0% promotions. The Afterpay pages carry no effective date.

Zip. Zip describes its products as available to approved applicants after a credit assessment. As read on 31 October 2026, Zip Pay has a limit of up to $1,000 and a $9.95 monthly fee that is waived if the statement balance is paid in full by the due date. Zip Plus runs from $2,000 to $20,000. Zip Money has limits of up to $5,000 applied for directly, or up to $50,000 through select Zip merchants, with interest-free terms of up to five years subject to minimum spend and merchant offers.

Shop Pay Instalments. Per Shopify’s help centre, as at 31 October 2026:

• Australia is in early access, for online stores only, with an Australian business entity, AUD as the selling currency, and both Shopify Payments and Shop Pay active.
• Orders from $50 to $30,000, including discounts, shipping and tax, are eligible. Orders under $50 are not.
• Options are four interest-free payments due every two weeks, or monthly payments over 6, 12 or 24 months with interest from 0% to 36% p.a.
• Australian customers must pay with a debit card. Credit cards are not supported.
• Affirm decides each customer’s eligibility and may ask for details such as employment status and income. The customer needs an Australian billing address and a Shop Pay account.
• If a customer is not eligible, the option may not appear, or they may get an error and need another payment method.

I could not open the original Affirm and Shopify launch announcement, so I rely only on Shopify’s help centre for terms, and I have not repeated any fee claims from press coverage.

Two points follow. “Interest-free” describes the four-payment plan; the monthly plans carry interest from 0% to 36% p.a., so do not describe the whole product as interest-free on your store. And you cannot see who was declined: an ineligible shopper simply does not get the option, which makes a gap between BNPL interest and BNPL orders hard to diagnose.

Checkout placement and setup

Afterpay. Shopify’s help centre lists buy-now-pay-later services among the additional payment methods you activate from Settings, Payments. Afterpay’s free On-Site Messaging app adds messaging to product and cart pages. On 31 October 2026 its Shopify App Store listing showed 3.2 stars from 56 reviews, and the reviews I could read included one saying the widget would not appear until the theme was saved and another unable to add it to the cart page.

Zip. Zip’s developer guide for Australian stores has you install Zip’s payment app from the Shopify App Store and enter your live keys from the Zip merchant dashboard. Zip’s On-Site Messaging app is free but only for Zip merchant partners. Its listing showed seven reviews at 1.0 stars on the same date, two of them reporting conflicts with other apps.

Both listings are a reason to test messaging on a copy of your theme before publishing, not a verdict on the apps.

Shop Pay Instalments. Shopify’s activation steps are a setting under Shopify Payments, Shop Pay, and the pages I read mention no separate app. Calculated instalment amounts show when customers view products, and at checkout the shopper first uses Shop Pay, then selects to pay in instalments. Shopify also lists product page and cart page banners and an Australian marketing toolkit. Because it sits inside the Shop Pay flow, it only helps shoppers who are or become Shop Pay users.

So Afterpay and Zip show up as payment methods in checkout and can be advertised earlier through messaging, while Shop Pay Instalments is a choice made after picking Shop Pay. A common placement for any of them is near the price, so a $120 item reads as four smaller payments early. Test it rather than assume it. Our checkout leakage audit covers where else shoppers drop out.

What the “higher order value” claims are worth

• Afterpay’s Australian business page says active Afterpay consumers spent 54% more overall and had an average order value 28% higher. Its footnote credits a Mastercard study of June 2022 that compared Afterpay consumers with a lookalike control group over 12 months. That compares types of customers, not your store before and after. People who choose BNPL for larger purchases differ from people who do not, so a higher average order value among BNPL users does not show that BNPL caused it.
• Shopify’s help centre says Shop Pay Installments can improve conversion rates and average order value, with no figure and no source.
• Zip’s Australian business page makes qualitative claims about conversion and bigger carts and gives no figures.

I have left out US and global marketing figures, which is what most search results for this topic lean on. None of the three gives an Australian, store-level before-and-after number you can plan around. The only number that matters is your own, which is why the next section is arithmetic and not a promise.

Worked example: does the fee pay for itself?

This is an illustration. The figures are not any provider’s rate and not a result from any store.

Assumptions:

• Average order value $100 (ignore GST for simplicity).
• Contribution margin before payment fees 50%, so $50 per order after product cost, packaging and shipping. Our contribution margin per order example shows how to calculate yours.
• Card order: Shopify Payments Basic rate, 1.7% plus 30 cents, which is $2.00. A card order leaves $48.00.
• BNPL order: a percentage plus 30 cents. I try 3% (the RBA’s 2025 average), 4% and 5%.

The 30 cents is the same on both, so the extra cost of a BNPL order is just the percentage gap:

Test 1: new orders. Suppose some BNPL orders would not have happened at all without the option. Every BNPL order carries the extra fee compared with a card order, and each genuinely new order adds the $48.00 a card order would have left (before its extra fee, which is already counted). The fee pays for itself when the share of new orders among BNPL orders is at least the extra cost divided by $48.00. At 4%, that is $2.30 / $48.00 = 4.8%.

Test 2: bigger orders. Suppose no extra orders, but BNPL orders are larger than those shoppers would otherwise have placed. At 4%, a BNPL order leaves $46.00 per $100 (50% less 4%), less 30 cents, so break-even is 46 × (1 + u) − 0.30 = 48.00, which gives u = 5.0%. The BNPL order must be 5% bigger, at the same margin.

Cross-check at 4% with 1,000 orders a month and 200 paid by BNPL: the extra fee is 200 × $2.30 = $460 a month. That is covered by about 9.6 genuinely new orders (9.6 × $48 = $460) or about $1,000 of extra revenue from larger orders (46% of $1,000 = $460).

Thin margins raise the bar. At a 30% contribution margin and a 4% fee, a card order leaves $28.00 and the extra cost is still $2.30, so you need 8.2% of BNPL orders to be new, or BNPL orders 8.8% bigger. Stores with thin margins or heavy discounting should read first-order profitability first.

Refunds raise the effective fee. Shopify says the Shop Pay Installments fee is not returned on a refund. If 20% of orders were refunded in full and the fee were not returned, a 4% fee would be 5.0% of the revenue you kept (4% divided by 0.8). I could not find the refund treatment for Afterpay or Zip on their public pages, so ask.

The example does not say whether BNPL produces new or bigger orders in your store. It says how much it has to produce, and only a test can show whether your store clears that bar.

How to decide, and how to test it

1. Get your effective fee in writing: percentage, fixed fee, GST, refund treatment, payout timing and who bears non-payment risk.
2. Run the break-even for your own margin and average order value using the two tests above.
3. Start with one provider. Three BNPL buttons add clutter and three sets of fees. Let your order data say whether a second is worth it.
4. Check the basics. Place a test order with each method on a real phone, confirm the order shows the right payment method in Shopify, and see how your analytics treats the return from the provider’s page. Our guide to broken attribution on Shopify covers the usual traps.
5. Measure net contribution per session after fees, alongside conversion rate, average order value, share of orders by payment method and refund rate. Average order value alone flatters BNPL, for the selection reason above. If you only watch three numbers, use the three numbers Shopify founders watch.
6. Use a split test if traffic allows, and a before-and-after if not, over comparable weeks and never across a sale weekend. Our guide to A/B testing on low traffic sets out the traffic floor.
7. Write the decision rule first. For example: keep it if net contribution per session is higher after six weeks and the effect is above my break-even. Without that, almost any result can be read as a win.

If the aim is a bigger order, BNPL is one lever among several. A free shipping threshold or bundles and upsells lift order value without a fee on the whole order, though they have their own margin checks.

Surcharging and wording (not legal advice)

This is general information, not legal advice. Check your agreements and take advice for your situation.

• Surcharging BNPL. The RBA’s removal of card surcharges applies from 1 October 2026 to eftpos, Mastercard and Visa card payments, and the RBA’s FAQ says it does not currently regulate surcharges on non-card payment methods. For BNPL, the RBA concluded in 2021 that providers’ no-surcharge rules should go, but its June 2026 issues paper says it did not introduce a rule because it was unsure whether BNPL providers fell within its powers, and it mentions no-surcharge rules imposed by some BNPL providers without saying whether they still apply. Whether you may add a BNPL surcharge therefore depends on your agreement and the ACCC’s surcharging guidance. Our post on the RBA card surcharge change covers the card side.
• BNPL is regulated as credit. ASIC says that from 10 June 2025 anyone engaging in credit activities involving BNPL contracts must hold an Australian credit licence. ASIC’s information sheet is about those engaging in credit activities and I found no merchant-specific requirements in it, but it is a reason to use each provider’s approved messaging. Shopify points to Australian disclosure requirements and a merchant toolkit for Shop Pay Instalments, so use those rather than writing your own claims about what is interest-free.

Key takeaways

• As at 31 October 2026, none of the three publishes a merchant rate for Australia, and the RBA says BNPL providers typically do not. Benchmark with your own agreement.
• The RBA put average BNPL merchant fees at about 3.0% in 2025, against about 0.8% to 1.0% for Visa and Mastercard credit.
• Shop Pay Instalments in Australia was in early access: $50 to $30,000 orders, debit card only, Shopify Payments and Shop Pay required, Affirm decides eligibility.
• Payouts run from next day (Zip) to 1 to 3 business days (Shop Pay Instalments); Afterpay’s pages give two timings. Get risk and refund treatment in writing.
• In the worked example, a 4% fee against a 1.7% card fee pays for itself if about 5% of BNPL orders are new or about 5% bigger. Thin margins raise that.
• Provider order-value figures compare types of customers, not your store before and after. Measure net contribution per session.

FAQs

Which is cheaper for Australian merchants: Afterpay, Zip or Shop Pay Instalments?

None publishes a rate for Australian stores, so no honest ranking is possible from public pages. The RBA’s 2025 average for BNPL as a whole was about 3.0% of transaction value. Your agreement or Shopify admin gives your actual figure, so compare effective percentages on your average order.

Can I use Shop Pay Instalments in Australia?

As at 31 October 2026, Shopify listed it as in early access for eligible online stores with an Australian business entity, AUD as the selling currency, and Shopify Payments and Shop Pay both active. Orders must be between $50 and $30,000 and customers must pay by debit card. Early access terms can change, so check your Shopify admin and the help page.

Does BNPL increase conversion rate and average order value?

Providers say it does, but the Australian figures I found compare BNPL users with other shoppers, or give no number. They do not show what BNPL did to your store. Use the break-even above, then test.

Can I add a surcharge for BNPL payments?

Not without checking. The RBA’s card surcharge removal covers eftpos, Mastercard and Visa, and the RBA says it does not currently regulate surcharges on non-card methods. Your BNPL agreement and ACCC guidance decide the rest. This is not legal advice.

Who is liable if the shopper does not pay, and is the fee refunded?

Zip says it takes the customer credit and fraud risk. Shopify says you are not at risk if customers stop paying Shop Pay Instalments, because Affirm collects, and that its fee is not returned on refunds. Afterpay’s merchant fees page does not address either point, so confirm both in your agreement.

Should I offer more than one BNPL option?

Start with one, and add another only if your data shows declines or drop-offs a second provider would fix. Each extra option adds fees, setup and messaging to maintain.

Want your checkout tested, not guessed at?

Whether a payment option earns its fee is a conversion question, and it depends on your margins, mobile checkout and tracking. Our Shopify CRO service starts with a six-phase audit that includes a tracking check. We do not sell or set up payment methods and we do not give financial advice; which provider to use, and what to sign, stays with you and your accountant. If you would like a second pair of eyes first, book a free 30-minute diagnostic or tell us about your store. We share your Shopify store on screen and name two or three conversion leaks live, and tell you whether they are worth fixing. No pitch.