Afterpay collected almost 20 million dollars from New Zealanders in late fees last year, even as the buy now pay later platform was telling customers its service was interest free, newly filed accounts and reporting from RNZ have revealed.
The Australian-founded operator generated 19.7 million dollars in late fee income during the year to 31 December 2025, up from 18.5 million dollars the year before, according to RNZ. The figure has been climbing steadily even though the parent company, US-listed Block, repeatedly markets the product as a no interest alternative to credit cards.
Late fees are only one part of an increasingly profitable New Zealand business. Afterpay’s local arm posted total revenue of 143.1 million dollars in 2025, up from 121.9 million dollars in 2024, with core buy now pay later revenue rising 16.5 percent to 119.99 million dollars. Operating profit jumped 63.1 percent to 9.5 million dollars, and net profit more than tripled, rising 214 percent from 1.1 million dollars in 2024 to 3.5 million dollars last year, the New Zealand Herald reported.
The company attributed the growth to an increase in the value of consumer orders processed through the platform as both consumer and merchant demand for the Afterpay service continued to expand. More than 500,000 New Zealanders have used the service over the past nine years, according to figures the company has previously made public.
The fee structure that drives the 19.7 million dollar late payment haul is straightforward but unforgiving. On orders up to 40 dollars, Afterpay charges a one-off late fee of up to 25 percent of the purchase price. On orders above 40 dollars, the first missed payment triggers a 10 dollar fee, with another 7 dollars added if the bill remains unpaid after seven days. The maximum a single purchase can attract is whichever is lower of 25 percent of the borrowed amount or 68 dollars.
What makes the latest figures especially pointed is that the fees no longer need to be linked to the company’s actual costs. In November 2024 the government exempted buy now pay later providers from sections 41 and 44A of the Credit Contracts and Consumer Finance Act, the same provisions that force conventional lenders to keep fees in line with what it actually costs them to chase a late payment.
Consumer NZ spokesperson Gemma Rasmussen told RNZ that the exemptions had effectively rewritten the rulebook for the sector. “These exemptions mean that late fees no longer need to reflect the true cost incurred,” she said. With nearly 20 million dollars now flowing in from late fees alone, that change appears to have padded the margins of the country’s largest buy now pay later operator at the very moment household budgets are under their tightest pressure in a generation.
FinCap, the umbrella body for the country’s financial mentoring services, has been blunter still. Spokesperson Jake Lilley warned that mentors are seeing a growing number of low income families using buy now pay later schemes to cover groceries, power bills and other essentials, telling RNZ the result is a debt treadmill that just keeps accelerating for those least able to absorb extra costs.
The wider buy now pay later sector has been under strain through 2026. Credit reporting agency Centrix reported in April that arrears across the buy now pay later sector eased back to 8.8 percent, breaking a long run of consecutive monthly increases, but the figure remains well above arrears rates for mainstream consumer lending. The improvement coincided with new responsible lending obligations introduced last year that require buy now pay later operators to run affordability checks on new customers.
Behind the New Zealand profit story sits a much larger global retrenchment. Afterpay was bought by Twitter founder Jack Dorsey’s payments company Block, formerly known as Square, in a US 28 billion dollar deal in 2022. Block has since written down billions of dollars in goodwill on the acquisition and announced plans earlier this year to shed roughly 40 percent of its 10,000-strong workforce. Afterpay’s New Zealand entity is in the middle of its own restructure under that plan, with the local accounts noting a workforce reduction programme expected to be substantially complete by 30 June. Block staff in the affected roles can read our guide to your rights when your employer makes you redundant in New Zealand.
The local result suggests the New Zealand market is one of the brighter spots in Block’s global portfolio, with growth in transactions, sharply higher profitability and a late fee line that expanded by more than a million dollars year on year. Whether the Luxon government, the Commerce Commission or a future review of the Credit Contracts and Consumer Finance Act will act on the concerns raised by Consumer NZ and FinCap is now the open question. For the moment the data tells a simple story. New Zealanders are using buy now pay later more than ever, paying more in penalties when they slip behind, and helping turn what was a slim local profit into a much larger one in the process.
Have you used Afterpay or another buy now pay later service? Have late fees caught you out, or do you find these platforms a useful way to spread the cost of bigger purchases? Share your experiences and your view on whether the rules need tightening in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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