You can accept Afterpay on Square by enabling it in your Square Dashboard under Payment Methods. There’s no separate application or third-party integration needed, but your business must fall into an approved merchant category, and the processing fees are significantly higher than standard card rates.
How to Enable Afterpay in Square Dashboard
Log in to your Square Dashboard and navigate to your Payment Methods settings. If your business qualifies, you’ll see an option to enable Afterpay. Toggle it on, and you can start accepting Afterpay payments for in-person sales, online checkout, invoices, and virtual terminal transactions.
Only account owners or team members with the “account and settings” permission can enable Afterpay. Once it’s activated, any team member with checkout permission to take payments can process an Afterpay transaction. There’s no additional hardware required for in-person sales. Afterpay works through your existing Square POS app, whether you’re using Square POS, Retail POS, Restaurants POS, or Appointments POS.
Eligibility Requirements
Your business must be in an approved merchant category. Square doesn’t publish a full list of approved categories, so the fastest way to check is to log in and look at your Payment Methods page. If Afterpay appears as an option, you’re eligible.
Certain product types are explicitly restricted. You cannot use Afterpay for gift cards, reloadable debit cards, or cash equivalents. Alcoholic beverages, tobacco, e-cigarettes, and vaping products are off-limits. So are weapons, ammunition, gambling-related goods, prescription drugs, adult content, and counterfeit or pirated products. If your business sells items in one of these categories, the option to enable Afterpay either won’t appear or could be revoked after activation.
What Afterpay Costs You
Afterpay transactions carry a flat rate of 6% plus 30 cents per transaction, regardless of how the sale happens. That rate applies to in-person payments, online orders, invoices, and virtual terminal entries. Unlike standard card processing fees, the Afterpay rate doesn’t change based on your Square subscription tier or any custom pricing you may have negotiated.
To put that in perspective, a standard in-person card transaction on the free Square plan costs 2.6% plus 15 cents. On a $100 sale, that’s $2.75 in fees. The same $100 sale through Afterpay costs $6.30. That’s more than double. For online sales, the gap narrows slightly since standard online processing already runs 2.9% to 3.3% plus 30 cents, but Afterpay is still nearly twice as expensive.
The tradeoff is that buy-now-pay-later options can increase average order size and conversion rates, especially for discretionary purchases. Whether the higher fee makes sense depends on your margins and how much the payment flexibility matters to your customers.
How Afterpay Works for Your Customer
When a customer chooses Afterpay at checkout, they pay 25% of the total upfront. Afterpay splits the remaining balance into three additional payments, each due two weeks apart. The customer deals with Afterpay directly for those installments. You don’t manage the payment plan, chase late payments, or take on any credit risk.
For in-person sales, the customer scans a QR code or barcode from their Afterpay app at your Square terminal. For online sales through Square Online, Afterpay appears as a payment option during checkout. In both cases, the transaction shows up in your Square Dashboard like any other sale, with the Afterpay fee already deducted.
Handling Refunds
You process Afterpay refunds through your Square Dashboard or POS the same way you would any other refund. When you issue a refund, the customer’s remaining Afterpay installments are adjusted accordingly. If they’ve already made payments beyond the refund amount, Afterpay handles returning the excess to the customer. Keep in mind that the 6% plus 30 cents processing fee you paid on the original transaction is not refunded to you, which is consistent with how Square handles standard card refund fees.
When Afterpay Makes Sense
Afterpay tends to work best for businesses selling products in the $50 to $500 range, where splitting the cost into four payments makes a meaningful difference in a customer’s willingness to buy. Retailers, beauty and wellness businesses, and service providers with mid-range price points see the most benefit. If your average transaction is under $20, the higher processing fee eats into your margin without much conversion lift, since customers rarely need a payment plan for small purchases.
You receive the full payment from Square on your normal payout schedule, minus the processing fee. There’s no waiting for the customer to finish their installment plan. That immediacy is one of the main advantages over offering your own payment plans, which would require you to absorb the credit risk and manage collections yourself.