by | Jun 2, 2023

Afterpay Limited is a financial institution for ‘Buy Now Pay Later’ headquarters in Sydney, Australia. Afterpay is not only available in Australia, but also in New Zealand, Canada, the United States and in United Kingdom which the business is trading as ClearPay. Afterpay launched in Australia in 2015 and entered as a public company on the ASX in 2016. In early 2022, all of Afterpay’s stock was purchased and the business was acquired by Block inc.

The External Environment

A business tends to have an internal and external environment. In the external environment, there are 2 topics; Operating Environment and Macro Environment.

The Operating Environment consists of 4 factors which are;

  • Competitors Behaviour
  • Suppliers & Supply Chain
  • Customer Needs & Expectations
  • Special Interest Groups

In the Operating Environment, the business has some control over the factors mentioned above. Afterpay also follows this in their operating environment. For Afterpay’s instance, they have a major competitor for their Australia and New Zealand customers, Latitude Financial Services, trading as Gem Finance in New Zealand. They have been in the market since the same year of when Afterpay started so both businesses would have very tight competition.

The Macro Environment consists of 6 factors which are;

  • Economic Conditions
  • Technological Considerations
  • Global Considerations
  • Corporate Social Responsibility Considerations
  • Legal and Government Regulations
  • Societal Attitudes & Behaviour

In the Macro Environment, the business has no control over these factors and the business usually can affect the status of a business if not followed. These factors always change from time to time and it is crucial for a business to plan for them prior they are officially affecting them. Afterpay has to follow Legal & Government Regulations in order to function as a business. Recently, a new legal issue has been raised and being going around in the public. ‘Buy Now, Pay Later’ businesses must implement the Consumer Credit Act 2009. This will be a game-changer in the market for Afterpay and it’s competitors as most of the BNPL businesses have not been implying credit background checks.

The process of Afterpay is:

  1. Choose a product from an Afterpay retailer online or in-store
  2. Proceed to the checkout and select Afterpay as the payment method
  3. Once, an account has been created and you have been approved (instant approval decision), you will be able to own the product
  4. You pay the installments in 4 payments which will always be interest-free


Stakeholders are individuals, groups, or organisations who have a vested interest in the performance and activities of a business. Suppliers, which we will refer to as merchants in this report, are the 3rd-party businesses which offer Afterpay’s BNPL service to its customers. Many customers rely on this service for them to purchase the products they are wanting from their suppliers. 

For example, one of Afterpay’s operating factor stakeholder would be competitors as their actions in the market can affect the position of the business. The government department who specialises in the financial issues in Australia would be considered as a stakeholder for BNPL organisations like Afterpay. This is because as of today, BNPL businesses are not considered to be working and following the Consumer Credit Act, but after the law is issued, they will be following it.

Technological Developments

As mentioned above, Afterpay was acquired by Block Inc in 2022. However, the truth behind this is that, Block Inc was formerly known as Square Inc. Square Inc is the multinational technology company who build and provide Point-of-Sale (POS) products, solutions and hardware to businesses from roadside trucks to large restaurants. Now, Square offers Afterpay as a BNPL payment option to merchants who use Square on a daily basis. Many Australians are familiar with this white little card machine. With this, businesses who use Square POS and are Afterpay Merchants have an advantage of generating more sales/leads.

Afterpay released an app for their iOS users towards the end of 2021 due to the fact a competitor business named Money had released theirs and had great success. Afterpay was expected to release an Android app in 2022 and did release it. Afterpay’s app has a success of online shopping with merchant integration and products.

Many customers take advantage of ‘Buy Now Pay Later’ institutions by opening multiple accounts as Afterpay does not require much verification. After customers open these accounts, they tend to have financial issues trying to pay back what they’ve purchased under the BNPL scheme, which makes them to open loans or get credit products such as credit cards. When this tends to happen, they end up in debt and the interest keeps on racking up daily. Most of their income goes towards paying back these ‘loans’ and have very less amount to spend for essential needs. Customer confidence levels are when consumers tend to purchase products they do not need and it has been rapidly increasing over the past decade. This involves economic growth which is great for our trading and economy services globally, but for the ‘lower to middle class’ families, they are just working their life off to pay back.

Overseas Competitors

Afterpay has one major overseas based competitor. Klarna offers the exact same service as Afterpay, 4 installment payments however, you can use Klarna at any store, not just specific merchants. One of the factors Klarna offers is that there is no late fee of installment paymennts for purchases under $25, however Afterpay may charge up to 25% depending on how late you pay and the price of the product. As many customers prefer one card for any store they prefer, Afterpay has to make up to this competition due to the factor of Klarna only came to the Australian market in 2020.

Corporate Social Responsibility

Corporate Social Responsibility is the business responsibility beyond just the legal laws and business operations. A business which focuses on CSR has a likelihood of a higher success rate. Many organisations choose to donate to non-profit organisations or partake in environmental activities.

In April 2021, Afterpay introduced a new sustainability element to their service. Afterpay had partnered with Magpies & Peacock and Surfrider which are both non-profit organisations. Customers had the option to add a $1 donation to these organisations and Afterpay would match the customer’s donations and donate the money to these organisations. This element Afterpay had decided during business planning helped build their Social Responsibility.

Another Social Responsibility element Afterpay included was during the hard times of COVID-19, Afterpay partnered with A Common Thread and Baby2Baby organisations to provide donations. They had the same program as the $1 donation and Afterpay had committed to donating over $200,000 to multiple organisations over the world.

Afterpay has also started an Environmental project. They have partnered with Patch to reduce emissions for Climate Change. Afterpay implemented Patch’s API into their backend software and with that, customers who are interested can see their estimated carbon impact of their spending history and cost of offset to the related emissions.

Special Interest Groups

Special Interest Groups are unions, associations, and groups who represent and evaluate businesses and companies to benefit a cause. Afterpay has banks who represent them as unions as they receive the financial support from them. As, BNPL organisations are required to work under the Consumer Credit Act soon, they will get more support from businesses.

Consumer Confidence

Consumer Confidence is the measure of evaluating on how consumers are finding the current and future market and economic conditions. Consumer Confidence is measured every month with around 1200 households by Westpac-Melbourne Institute Index of Consumer Sentiment. This survey includes household questions related to current financial and household future financial status. It is recommended for businesses to plan new solutions and services when consumer confidence is high. To make sure Afterpay follows this pathway of consumer confidence, Afterpay set out these 4 following protections for consumer confidence. With these factors put in place, according to Afterpay’s research, customers are very unlikely to fall in debt as 95% installments are paid on time.

  1. Customer spending limits start low (average order value is less than $150) and increase over time with positive customer repayment history.
  2. If a single payment is missed, the consumer cannot use our platform, which ensures that they can’t fall into the revolving cycle of debt.
  3. Afterpay offers a hardship policy and allows for a flexible payment arrangement without charging any additional fees.
  4. Soft credit checks were introduced for US in-app customers to help customers spend within their means – creating a healthier, more responsible customer base for our merchants and for our platform.

Customer Needs & Expectations, Societal values & Beliefs and Behaviours

Societal values & Beliefs are the standards which a group holds and a business decides if they will follow these decisions during business planning. Businesses are recommended to regularly change research the market and societal values to update their business operation depending on the trend. Customer needs are needs the essential requirements for a customer which a business should meet to gain customer satisfaction. However, customer expectations are also good to have for a business but they are not essentially required.

Afterpay’s made to meet customer needs and satisfaction. Afterpay only issues late installment fees in the United States and makes sure if a customer misses a payment, the account of the customer gets locked till they’re up to date. This ensures customers to follow these expectations so that they can receive the full benefit of the service and Afterpay remains sucessful.