This article contains links that, if you click, we may receive a commission at no cost to you.
Zip, formerly known as Quadpay, is a Buy Now, Pay Later company that allows its customers to make purchases with 4 interest-free payments.
Adam’s View
While Zip Pay offers a wide variety of retailers in addition to interest-free repayment plans, it will be pretty challenging for your average customer to avoid the additional fees that come along with the service. There may be better options using another Buy Now Pay Later company – Affirm.
At A Glance
PROS & CONS
| PROS | CONS |
|---|---|
| ✔ 0% Interest | X Monthly account fee of .95 |
| ✔ Available at big-box retailers. | X fee platform fee per installment payment |
| ✔ In-store and online purchases | X Late fees starting at |
Who Should Use Zip?
Zip Pay is a good option for:
You do not qualify for a credit card.
You want to finance smaller purchases and can avoid the fees.
Zip Pay is not a good option for:
- People looking to build their credit
- You have poor credit history and trouble making on-time payments
- Financing purchases larger than ,500
What Is Zip?
Zip is a global payments company founded in 2013 and headquartered in Sydney, Australia.
Like its predecessor Quadpay, Zip offers a buy now, pay later payment platform that provides customers an interest-free payment plan through 4 bi-weekly installments.
Zip serves 6 million customers across five contents and is offered by over 45,000 merchants. In addition, the company is publicly traded on the Australian Stock Exchange and is known as a pioneer in the Buy Now, Pay Later category.
How Does Zip Work?
Zip’s most popular service is Zip Pay. With Zip Pay, customers can split purchases into 4 interest-free payments. 25% of the purchase amount is due at checkout, and the remaining balance is paid in 3 installments every two weeks.
If you are approved to use Zip Pay, they offer credit limits between 0 and ,500. As with most BNPL companies, your available credit limit may be in the lower range until you have established a successful repayment history with the firm.
While there are no interest charges, Zip does charge a platform fee for every installment payment and a .95 monthly account fee if your balance statement balance is not paid, in full, by the due date.
Zip Pay Vs. Zip Money
Zip’s most popular payment plan is ‘Zip Pay,’ which is for purchases less than ,000 and is interest-free. However, Zip also offers ‘Zip Money,’ a service for transactions greater than ,000. Zip Money is only interest-free for 3 months, among other differences.
Let’s take a look below.
| Feature | Zip Pay | Zip Money |
|---|---|---|
| Good For | Everyday spending | Large purchases |
| Spending Limits | 0 – ,000 | Greater than ,000 |
| Interest Charges | 0% interest | Interest-free for 3 months, (19.9% thereafter) |
| Repayment Amount | Starting at | Repayments from per week or 3% of the outstanding balance (whichever is greater) |
| Monthly Account Fee | .95 | .00 |
| Late Fees | Yes. , , or depending on your state of residence | Yes. , , or depending on your state of residence |
| Platform Fees | installment payment | |
| Establishment Fee | Pay nothing to sign up. | One-off account establishment fee A sign-up fee, which depends on the limit. |
| Other Features | Some purchases qualify for promotional interest-free periods (up to 60 months) |
Monthly Account Fees Explained
A monthly account fee of .95 applies for Zip Pay and for Zip Money. This fee is waived each month you pay your statement closing balance, in total, by the due date. Available to approved applicants only.
Honestly, this isn’t very clear. Zip Pay is advertised as interest-free. However, you will be charged an account fee if you do not pay off your closing balance at the end of the statement month.
That said, if you pay bi-weekly over 6 weeks, you inevitably will have to pay the account fee because the average statement period is around 30 days.
Let’s Break It Down:
Purchase Amount: 0
Repayment Method: Bi-weekly
Payment 1 October 1st (Purchase Date): 0
Payment 2 October 15th: Amount Due: 0
Payment 3 October 22nd: Amount Due 0
Date: November 5th, 2021: Amount Due 0
Using the assumptions above, you did not pay off your balance before your closing date of November 1st, so you would owe .95.
To avoid the monthly fee, pay off your balance by October 31st.
Repayment Amounts Explained
Zip Pay: You have the ability to change the frequency of your payments to weekly, bi-weekly, or monthly, as long as you pay the minimum of per month.
Is Zip Really Interest-Free?
Yes, Zip is interest-free, but there are fees. A monthly .95 fee applies if you do not pay off your balance by the end of your closing period. There is also a per installment payment fee.
Alternatives To Zip
- Klarna (Allows customers 3 methods of financing including interest-free financing.)
- Afterpay (Allows customers to split into 4 interest-free payments for purchases as small as ). The average purchase size using Afterpay is 0. They do not charge interest but have late fees. Each purchase must be approved.
- Affirm Customers can make larger purchases often with fees and also allow in-store purchases using Affirm.
- Sezzle is Available for online-only purchases. Not available at many big-name retailers
