What is Clearpay and How It Works

Clearpay, operated by Clearpay Finance Ltd and a sister company to the Australia-based Afterpay, is a payment service that allows shoppers to make purchases instantly and then repay the amount in four automatic fortnightly instalments.

With over one million downloads on Google Play and ranking 19th in the Shopping category on the App Store, there’s no doubt that Clearpay is one of the most popular Buy Now Pay Later (BNPL) apps today.

Clearpay gives you a fixed amount of credit to make purchases without interest, while splitting payments into four equal instalments.

We take a look at how Clearpay works and the advantages of using this payment method.

How Clearpay Works

Clearpay partners with many well-known retailers, allowing customers to purchase items online or in-store immediately while deferring payments.

Customers shop online at their preferred retailer and select Clearpay as the payment method at checkout. They then provide payment information (bank or credit card) to either log in or create a Clearpay account.

The cost of your items will be split into four equal payments: the first is paid immediately, and the remaining three are automatically deducted from your account every two weeks.

Some features of Clearpay include:

• No fees. Clearpay is free to use as long as you make payments on time.

• No interest. Clearpay charges no interest on your purchases.

• Automatic payments. The remaining three instalments are automatically withdrawn every two weeks.

• Easy to manage. Purchases are split into four equal payments.

• Immediate order processing. Clearpay pays the full amount upfront to the retailer, so your order is shipped right away.

Fixed Payments

Unlike Klarna and other BNPL providers, Clearpay offers only one type of payment plan. This can make things simpler for users since everyone follows the same structure.

However, Clearpay doesn’t offer a “try before you buy” option like Klarna. This is because Clearpay splits the cost into four equal payments, with the first instalment charged at the time of purchase.

Even if you return the product and receive a refund, payments will continue to be withdrawn until you confirm whether you want to keep the new item.

Automatic Payments

Clearpay uses automatic payments to help customers avoid missing due dates.

However, this means you need to ensure your linked account has enough funds to cover the instalments. Unlike Klarna, Clearpay charges a £6 late fee for missed payments and a second £6 fee if the payment remains unpaid after seven days.

Be aware of this if you decide to use Clearpay.

User-Friendly App

Downloading the Clearpay app, available for iOS and Android, is useful if you plan to use Clearpay regularly. You can browse a comprehensive list of online retailers that accept Clearpay, manage your payments effectively, review your payment plan, and more.

If you have the funds and want to finish your repayment plan earlier, early payments are also possible.

How Much Does Clearpay Cost?

Clearpay is free from interest or other costs unless you don’t have enough funds to cover automatic payments. In that case, a late fee will be charged, and you’ll need to log into your Clearpay account to pay off your balance.

Is Clearpay Safe to Use?

The Afterpay Touch Group, which Clearpay is a member of, has received Level 1 certification from the Payment Card Industry Data Security Standard (PCI DSS). According to the company, your card and personal information are always secure when shopping with Clearpay.

How to Use Clearpay

To create a Clearpay account, you must be at least 18 years old and shop with a retailer that accepts Clearpay. When shopping online, follow these steps:

1. Find a retailer that offers Clearpay and add items to your cart.

2. Select Clearpay as your payment method at checkout.

3. Follow the steps to create an account.

4. Link a payment method (a debit or credit card).

5. Once your information is confirmed, you’ll receive an immediate result. If approved, Clearpay will take the first payment from your chosen account.

6. Your order will be shipped immediately after the initial payment.

Clearpay sends notifications before each payment to ensure you have enough funds in your account.

To shop in-store, download the Clearpay app from the iStore or Google Play and follow the in-app setup instructions for your Clearpay account. You can then proceed with your purchase and use Clearpay via Apple Pay or Google Pay at checkout.

You’ll pay 25% upfront (the first of four payments) and take the items with you. The remaining three payments will be deducted every two weeks.

What Happens If I Miss a Payment?

If you miss a payment, Clearpay will immediately block you from making further purchases using the service. For orders under £24, the late fee cap is £6.

For orders over £24, if you don’t select an alternative payment method, you have until 11 p.m. the next day to complete the transaction. Otherwise, a £6 late fee will be charged.

If the payment isn’t made within seven days, an additional £6 fee will be added. Late fees are capped at 25% of the order value or £36, whichever is lower, for orders of £24 or more.

Credit reference agencies have announced that BNPL debts will begin appearing on credit reports from Spring 2022, which means your credit score could be affected.

Clearpay vs Klarna

Founded in 2005, Klarna is currently one of the UK’s most popular BNPL apps, with over 10 million downloads from the Google Play Store as of July 2022.

Unlike Clearpay, Klarna offers three payment methods:

1. Pay in 30 days. Receive an invoice and pay the full amount within 30 days.

2. Financing. Spread the cost with monthly instalments at interest rates of up to 18.9% APR.

3. Pay in 3. Divide the purchase cost into three interest-free payments. The first at the time of purchase, the second after 30 days, and the third after 60 days.

Clearpay does not perform credit checks or consider your credit score when assessing your ability to pay, though it may pre-authorise your selected payment method. Klarna, however, performs soft credit checks for its Pay in 30 and Pay in 3 options.

Clearpay charges a late fee capped at £6, depending on your order value, and you’ll be blocked from further purchases. For payments overdue by seven days on purchases over £24, an additional £6 is added.

Klarna does not charge late fees for missed payments. If you chose the Pay in 3 option, Klarna will attempt to collect the payment twice more. If unsuccessful, the amount is added to your next instalment.

If you still can’t pay after the third attempt, Klarna will contact you to see if you’d prefer an alternative payment method. If no solution is found, the debt may be passed to a collection agency.

For the Pay in 30 credit option, if the debt remains unpaid for several months, it will also be classed as overdue and passed to a collection agency.

Summary

Clearpay is one of the best-known BNPL platforms in the UK, and for good reason. The platform offers some very handy features and is easy to use, set up, and manage.

There are, however, two main downsides:

1. Compared to Klarna’s three payment options, Clearpay offers fewer choices, and customers can’t “try before they buy” without paying the first instalment.

2. Because of Clearpay’s £6 late fee, many users may prefer Klarna, which doesn’t charge any late fees.