diff --git a/changelog/fix-9046-allow-empty-state-when-optional-afterpay-gateway b/changelog/fix-9046-allow-empty-state-when-optional-afterpay-gateway
new file mode 100644
index 00000000000..34b8d13c9d4
--- /dev/null
+++ b/changelog/fix-9046-allow-empty-state-when-optional-afterpay-gateway
@@ -0,0 +1,4 @@
+Significance: minor
+Type: fix
+
+Allow Afterpay gateway to process payments when the state/county is optional for GB and NZ addresses.
diff --git a/includes/class-wc-payment-gateway-wcpay.php b/includes/class-wc-payment-gateway-wcpay.php
index e1e6a3543c9..2ee0a00d1a1 100644
--- a/includes/class-wc-payment-gateway-wcpay.php
+++ b/includes/class-wc-payment-gateway-wcpay.php
@@ -4501,7 +4501,33 @@ private function upe_needs_redirection( $payment_methods ) {
 	 * @return void
 	 */
 	private function handle_afterpay_shipping_requirement( WC_Order $order, Create_And_Confirm_Intention $request ): void {
-		$check_if_usable = function ( array $address ): bool {
+		$wc_locale_data = WC()->countries->get_country_locale();
+
+		$check_if_usable = function ( array $address ) use ( $wc_locale_data ): bool {
+			if ( $address['country'] && isset( $wc_locale_data[ $address['country'] ] ) ) {
+				$country_locale_data = $wc_locale_data[ $address['country'] ];
+				$fields_to_check     = [
+					'state'     => 'state',
+					'city'      => 'city',
+					'postcode'  => 'postal_code',
+					'address_1' => 'line1',
+				];
+
+				foreach ( $fields_to_check as $locale_field => $address_field ) {
+					$is_field_required = (
+						! isset( $country_locale_data[ $locale_field ] ) ||
+						! isset( $country_locale_data[ $locale_field ]['required'] ) ||
+						$country_locale_data[ $locale_field ]['required']
+					);
+
+					if ( $is_field_required && ! $address[ $address_field ] ) {
+						return false;
+					}
+				}
+
+				return true;
+			}
+
 			return $address['country'] && $address['state'] && $address['city'] && $address['postal_code'] && $address['line1'];
 		};
 
diff --git a/tests/WCPAY_UnitTestCase.php b/tests/WCPAY_UnitTestCase.php
index 4470710b519..d7f38e3b5d0 100644
--- a/tests/WCPAY_UnitTestCase.php
+++ b/tests/WCPAY_UnitTestCase.php
@@ -114,14 +114,15 @@ public function createMock( string $original_class_name ): MockObject { // phpcs
 	 * @param  mixed                  $response                     The expected response.
 	 * @param  WC_Payments_API_Client $api_client_mock              Specific API client mock if necessary.
 	 * @param  WC_Payments_Http       $http_mock                    Specific HTTP mock if necessary.
+	 * @param  bool                   $force_request_mock           When true, a request will be mocked even if $total_api_calls is 0.
 	 *
 	 * @return Request|MockObject                                   The mocked request.
 	 */
-	protected function mock_wcpay_request( string $request_class, int $total_api_calls = 1, $request_class_constructor_id = null, $response = null, $api_client_mock = null, $http_mock = null ) {
+	protected function mock_wcpay_request( string $request_class, int $total_api_calls = 1, $request_class_constructor_id = null, $response = null, $api_client_mock = null, $http_mock = null, $force_request_mock = false ) {
 		$http_mock       = $http_mock ? $http_mock : $this->createMock( WC_Payments_Http::class );
 		$api_client_mock = $api_client_mock ? $api_client_mock : $this->createMock( WC_Payments_API_Client::class );
 
-		if ( 1 > $total_api_calls ) {
+		if ( 1 > $total_api_calls && ! $force_request_mock ) {
 			$api_client_mock->expects( $this->never() )->method( 'send_request' );
 
 			// No expectation for calls, return here.
diff --git a/tests/unit/test-class-wc-payment-gateway-wcpay.php b/tests/unit/test-class-wc-payment-gateway-wcpay.php
index 6879500a7b2..dbc0e81876b 100644
--- a/tests/unit/test-class-wc-payment-gateway-wcpay.php
+++ b/tests/unit/test-class-wc-payment-gateway-wcpay.php
@@ -13,6 +13,7 @@
 use WCPay\Core\Server\Request\Get_Charge;
 use WCPay\Core\Server\Request\Get_Intention;
 use WCPay\Core\Server\Request\Get_Setup_Intention;
+use WCPay\Constants\Country_Code;
 use WCPay\Constants\Order_Status;
 use WCPay\Constants\Intent_Status;
 use WCPay\Constants\Payment_Method;
@@ -21,6 +22,7 @@
 use WCPay\Exceptions\Amount_Too_Small_Exception;
 use WCPay\Exceptions\API_Exception;
 use WCPay\Exceptions\Fraud_Prevention_Enabled_Exception;
+use WCPay\Exceptions\Invalid_Address_Exception;
 use WCPay\Exceptions\Process_Payment_Exception;
 use WCPay\Exceptions\Order_ID_Mismatch_Exception;
 use WCPay\Fraud_Prevention\Fraud_Prevention_Service;
@@ -188,6 +190,13 @@ class WC_Payment_Gateway_WCPay_Test extends WCPAY_UnitTestCase {
 		 */
 	private $mock_duplicates_detection_service;
 
+	/**
+	 * Backup of WC locale data
+	 *
+	 * @var array
+	 */
+	private $locale_backup;
+
 	/**
 	 * Pre-test setup
 	 */
@@ -269,6 +278,8 @@ public function set_up() {
 			->method( 'get_payment_metadata' )
 			->willReturn( [] );
 		wcpay_get_test_container()->replace( OrderService::class, $mock_order_service );
+
+		$this->locale_backup = WC()->countries->get_country_locale();
 	}
 
 	/**
@@ -305,6 +316,7 @@ public function tear_down() {
 
 		wcpay_get_test_container()->reset_all_replacements();
 		WC()->session->set( 'wc_notices', [] );
+		WC()->countries->locale = $this->locale_backup;
 	}
 
 	public function test_process_redirect_payment_intent_processing() {
@@ -2825,6 +2837,120 @@ public function test_process_payment_for_order_upe_payment_method() {
 		$this->card_gateway->process_payment_for_order( WC()->cart, $pi );
 	}
 
+	/**
+	 * @dataProvider process_payment_for_order_afterpay_clearpay_provider
+	 */
+	public function test_process_payment_for_order_afterpay_clearpay( array $address, array $locale_data, ?string $expected_exception ) {
+		$payment_method                              = 'woocommerce_payments_afterpay_clearpay';
+		$expected_upe_payment_method_for_pi_creation = 'afterpay_clearpay';
+		$order                                       = WC_Helper_Order::create_order();
+		$order->set_currency( 'USD' );
+		$order->set_total( 100 );
+		$order->set_billing_city( $address['city'] );
+		$order->set_billing_state( $address['state'] );
+		$order->set_billing_postcode( $address['postcode'] );
+		$order->set_billing_country( $address['country'] );
+		$order->save();
+
+		$_POST['wcpay-fraud-prevention-token'] = 'correct-token';
+		$_POST['payment_method']               = $payment_method;
+		$pi                                    = new Payment_Information( 'pm_test', $order, null, null, null, null, null, '', 'afterpay_clearpay' );
+
+		if ( $expected_exception ) {
+			$this->mock_wcpay_request( Create_And_Confirm_Intention::class, 0, null, null, null, null, true );
+			$this->expectException( $expected_exception );
+		} else {
+			$request = $this->mock_wcpay_request( Create_And_Confirm_Intention::class );
+			$request->expects( $this->once() )
+				->method( 'set_payment_methods' )
+				->with( [ $expected_upe_payment_method_for_pi_creation ] );
+			$request->expects( $this->once() )
+				->method( 'format_response' )
+				->willReturn( WC_Helper_Intention::create_intention( [ 'status' => 'success' ] ) );
+		}
+
+		WC()->countries->locale = $locale_data;
+
+		$afterpay_gateway = current(
+			array_filter(
+				$this->gateways,
+				function ( $gateway ) {
+					return $gateway->get_payment_method()->get_id() === 'afterpay_clearpay';
+				}
+			)
+		);
+
+		$afterpay_gateway->process_payment_for_order( WC()->cart, $pi );
+	}
+
+	public function process_payment_for_order_afterpay_clearpay_provider() {
+		return [
+			'with valid full address'         => [
+				'address'            => [
+					'city'     => 'WooCity',
+					'state'    => 'NY',
+					'postcode' => '12345',
+					'country'  => Country_Code::UNITED_STATES,
+				],
+				// An empty locale data means all fields should be required.
+				'locale_data'        => [],
+				'expected_exception' => null,
+			],
+			'with incomplete address'         => [
+				'address'            => [
+					'city'     => 'WooCity',
+					'state'    => '',
+					'postcode' => '12345',
+					'country'  => Country_Code::UNITED_STATES,
+				],
+				'locale_data'        => [
+					// A missing `required` attribute means that the field will be required.
+					Country_Code::UNITED_STATES => [ 'state' => [ 'label' => 'State' ] ],
+				],
+				'expected_exception' => Invalid_Address_Exception::class,
+			],
+			'optional state'                  => [
+				'address'            => [
+					'city'     => 'London',
+					'state'    => '',
+					'postcode' => 'HA9 9LY',
+					'country'  => Country_Code::UNITED_KINGDOM,
+				],
+				'locale_data'        => [
+					Country_Code::UNITED_KINGDOM => [ 'state' => [ 'required' => false ] ],
+				],
+				'expected_exception' => null,
+			],
+			'optional state and postcode'     => [
+				'address'            => [
+					'city'     => 'London',
+					'state'    => '',
+					'postcode' => '',
+					'country'  => Country_Code::UNITED_KINGDOM,
+				],
+				'locale_data'        => [
+					Country_Code::UNITED_KINGDOM => [
+						'state'    => [ 'required' => false ],
+						'postcode' => [ 'required' => false ],
+					],
+				],
+				'expected_exception' => null,
+			],
+			'optional state, invalid address' => [
+				'address'            => [
+					'city'     => '',
+					'state'    => 'London',
+					'postcode' => 'HA9 9LY',
+					'country'  => Country_Code::UNITED_KINGDOM,
+				],
+				'locale_data'        => [
+					Country_Code::UNITED_KINGDOM => [ 'state' => [ 'required' => false ] ],
+				],
+				'expected_exception' => Invalid_Address_Exception::class,
+			],
+		];
+	}
+
 	public function test_process_payment_caches_mimimum_amount_and_displays_error_upon_exception() {
 		delete_transient( 'wcpay_minimum_amount_usd' );