Executive summary

Afterpay is a business that permits consumers to pay for goods in four installments. It
collaborates with over 55,000 online merchants who have chosen to accept its payment methods.
Afterpay generates money by charging retailers a fixed and variable (percentage) rate, as well as
late payment fees. Afterpay, which was founded in 2014 and is based in Sydney, has developed
to become one of the most popular payment options. The report provided an overview of the
organization's business model by examining the business model canvas. Afterpay can enhance its
performance by taking into account the following recommendations: organization to enhance its
business development procedure and assets, invest in technology, quickly invest in new products,
and develop the services they offer. They need to develop a well-organized supply chain, rely
solely on them, reduce payment times, and increase fees to help businesses mitigate the risk of
loan default rates.

Introduction

Afterpay is a Sydney-based company that allows online shoppers to "Buy Now, Pay Later." It's a
company that offers digital services for paying for goods within a few days of purchase.
Consumers will pay for their purchases in a number of installments. Within fourteen days, the
total sum can be charged in installments. The means of spending and earning by individuals has
become an important aspect of technological progress. Buyers today believe the easiness and
flexibility of the purchasing procedure. This matter can be fixed with a service offered by
Afterpay. This company was established with the purpose of increasing advanced technology. In
addition, a leading quality team has been formed to accomplish this goal. The company has made
easy and interest-free rates available to buyers so they can purchase the products they need
without having to pay immediately. Purchases can be completed online or by customers at stores
of different organizations. So, this company creates it easy for buyers to meet their needs without
worrying about how much it costs to buy a product.

Business model

The Business Canvas Model is a tool or even a system that is utilized to assist companies and
proprietors in better comprehending their organizations in an organized and straightforward
manner. The model is utilized to gain a clear and in-depth understanding of the consumers the
organization serves or may serve, as well as the various value propositions provided across
various channels and the way in which they are delivered.

Building blocks

A business model is a description of the value that a company provides to its customers. It
demonstrates the skills and resources needed to develop, sell, and deliver this value, as well as
generate profitable, long-term revenue streams. One of the most important steps in starting a
company is identifying and implementing a sustainable business model.

Customer segments

The business would create value for monetarily disadvantaged adults who are unable to pay a
significant amount of money in one go. Afterpay promotes responsible spending, and consumers
see Afterpay as a valuable budgeting tool, according to internal and external analysis. Customers
do not have to enter into a contract with Afterpay, unlike other payment options.

Value propositions

Afterpay has gained a lot of value among people in three different nations. The business has also
built up a vast database of clients, mostly college and university students over the age of
eighteen, as well as low-wage workers from various businesses. The business solves the problem
that people have when purchasing high-priced products. Afterpay’s strong value proposition:
interest-free payments for the buyer, charged to the retailer in four installments, enabled it to
successfully enter international markets. It's a highly adaptable value proposition that operates at
all scales. Furthermore, Afterpay established reputation by developing a familiar logo that stayed
stable throughout its development.

Channels

The organization offers value to its customers by electronically transferring funds to the
customer's account or directly paying retailers on the customer's behalf. A solid back-end
infrastructure is needed to ensure that different platforms and technologies communicate with
one another, which can be made simpler by partnering with the right provider. From desktop and
mobile checkout to in-store payment, Afterpay offers a consistent experience across all retailer
platforms.

Customer relationships

Customers today want to have a friendship with the brands they like. Retailers also make such
relationships one-sided. Retailers risk losing customers to rivals if they do not give customers
control over the entire brand experience. Customers are also demanding greater payment
versatility. Providing buy-now, pay-later solutions like Afterpay allows customers to spend on
their own terms, which leads to bigger cart sizes and more repeat purchases. Afterpay has a great
relationship with its clients, owing to the fact that there are no hidden fees and no interest on the
financed sum if the repayment is made on time.

Revenue streams

Afterpay does not charge consumers to utilize the service; instead, it makes money by charging
merchants a fee to use it. It also earns about 17% of its revenue by charging late fees to
customers.

Customers must pay back the first quarter of the unpaid balance two weeks after making their
order, with the remaining quarters paid back every two weeks after that. Payments are managed
routinely, and consumers have reminders earlier payments are unpaid.

Key resources

Afterpay serves as a middleman for retailers and consumers. Afterpay pays the manufacturer for
the product up front, and the buyer only repays Afterpay. It has no right to conduct a credit
review or report details to credit bureaus. Since there will be no background check, the
consumer's credit history will be unaffected. Credit checks, on the other hand, are a form of
consumer security.

Key activities

The company's main tasks are finance distribution, development and execution of major
sponsors, and handling the company's investors. Afterpay allows retailers to sell online
customers payment plans, enabling them to pay for a purchase in four installments, one due
every two weeks. It enables customers to procure products and pay for them by installation.
Key partners

Afterpay has quickly evolved how it serves its merchant partners beyond payment solutions, with
more than 64,000 merchant partners. Afterpay works with merchants to get input about what
they're buying, where they're buying it, what the best-selling products are, and what kinds of
customers they're attracting, as well as new vs. returning customers. During the holiday season,
they collaborated on a shoppable holiday campaign with a variety of top retail partners. Afterpay
collaborates closely with a large network of online industry experts. Since eStore is affiliated
with Afterpay, customers can take advantage of all of the experience and resources that they and
their partners have to offer.

Cost structure

During the 2020 fiscal year, an average of 17,300 new customers were added to the network per
day, rising to 20,500 new customers each day in the fourth quarter. The number of active
customers more than doubled to 9.9 million in the 2020 fiscal year, while the number of active
merchants increased by 72% to 55,400. By 2022, it wants to have $20 billion in underlying
revenue. The number of transactions made on the system and their average value per user
determine revenue.

Interrelationships

The value proposition block is the most important link between the nine building block model
blocks. The cost generation and sales flow of the business model are inextricably related to the
consumer segment that the company represents. The channels for companies to create value
propositions with their customers are also directly related to customer segment blocks and
customer relationship blocks. In order to have a decent source of income as a source of income,
the company's most important activities also need to meet customer requirements and improve
customer relationships. Business partners are directly linked to the main activities of the business
and their cost structure.

Success factors for sustainable development

Below are some of the success factors Afterpay needs to consider in order to achieve lasting
success.
It is essential for the company to build offices and stores in areas where it wishes to create a
positive reputation.

Individuals tend to conduct financial transactions in offices and shops that are on show. It gives
the company a genuine first impression.

It will raise significant funds from miners so that people with very low volume needs can also be
handled by the company.

With so many competitors, we get more visibility on our advertising and promotion services.

Another important strategy is to reduce the fees the business collects before they are not paid
within the allotted time.

Downside risks

There are many negative risks associated with Afterpay's long-term viability in Australia, the
United States, and New Zealand. Credit risk is the most important risk in business because it
occurs when the borrower fails to repay the amount borrowed for a variety of reasons, including
loss of earnings, demise, or related causes. Market risk and operational risk are risks and losses
due to fluctuations in exchange rates and commodity prices. Government regulations on billing
interest and fees, as well as internal business processes, are also included in market and
operational risk.

Business model changes

Certain changes can occur in the company which increase the factors of success and contribute to
sustainable development. Reducing fines on customers for on-time default will attract more
customers and help the company differentiate itself from its competitors. First of all, all financial
companies offer financing for a period of 6 to 12 months. Longer loan repayment periods are
helpful for many students and working people because they pay less in installments. It also
reduces the pressure on students and helps them pay properly. To attract more customers, the
company must open more physical locations to satisfy customers who believe in conducting a
thorough audit of the company before engaging in some form of financial transaction.

Recommendations
Afterpay requires to open more physical offices in the target region in order to serve more
clients. The business model also checks interest rates set according to national regulations. In
addition, companies need to adopt new advanced technologies to monitor their workforce
structure in order to organize their organizations. In addition, lowering the minimum funding age
from 18 to 16 is beneficial to the company.

Conclusion

The report discusses the Afterpay business model and it presented the business model in nine
building blocks. Likewise, short explanation of the relationship was presented. This report also
describes the success factors that can help a company achieve long-term success. In addition, this
report provided relevant information about the company's downside risk and suggested some
changes that could help the company stay in a highly competitive financial market.