Afterpay hit the ground running in the U.S. — and is still on the move.
The four-year old Melbourne-based company, which came to the U.S. a year ago, has already helped 1.5 million shoppers buy from online merchants, paying in four interest-free installments.
Levi’s, Ray-Ban, O’Neill and Tarte are among the latest brands to pick up the service, which has 3,300 U.S. e-commerce partners and another 1,000-plus merchants in the process of integrating the platform. Afterpay also works with Anthropologie, Goat, Revolve, True Religion and Urban Outfitters in the U.S. and has over 30,000 retail partners across the world.
The service helps consumers buy now and pay later without entering into a traditional loan or paying any upfront fees or interest. It also helps merchants drive larger order sizes from shoppers, who can pay off the purchase over time.
Afterpay zeroed in on Millennial shoppers, which is both an attractive demographic and adverse to building up debt — perhaps because they’re already swimming in college loans.
“Eighty-five percent of our customers use debit cards, not credit cards,” said Nick Molnar, cofounder and chief executive officer of Afterpay. “Two out of three 18- to 30-year-olds don’t actually own a credit card in the U.S.”
If consumers don’t make their follow-up payments, they lose access to the service and are liable, but retailers aren’t on the hook for the payment. Most people make their payments.
“We’re seeing our loss rates for our first-time customers are actually lower in the U.S. than in Australia,” Molnar said. “That responsibility layer is really flowing through. Millennials just have this aversion to traditional credit products that have an [annual percentage rate] built in.”
Molnar argued that the service creates a better dynamic for shoppers.
“There’s less buyer’s remorse when someone uses Afterpay,” he said. “They’re using [the purchase] while they’re paying it off. It’s a rental mind-set, per se, and they’ll return less.”
The company, which uses the “Shop Now. Enjoy Now. Pay Later.” tagline, also uses its web site to send consumers to sites that use the service.
“Customers are buying based on who accepts Afterpay,” Molnar said. “It’s millions of leads per month that we’re sending to our retailers.”
Now the company is moving to Europe, having gone live in the U.K. last month.