As retail continues to move into the online space, shopper-spending habits are adapting to this digital mode of consumerism. There are thousands of studies exploring how people use the web to buy clothes, but a new technology is revolutionizing this process as we’ve known it since the Internet’s inception. Australia-based technology company Afterpay introduces a quick, easy-to-use alternative to the typical pay all-in-one-go shopping experience.
“We’re not a traditional credit product or a payday lender, or quite honestly, like some others in the buy-now-pay-later (BNPL) industry,” said Chief Executive Nick Molnar. “You can think of Afterpay as a budgeting tool—or a modern-day, lay-by—except the customer gets the goods or service up front, which they pay in four equal installments.”
Afterpay is a retail technology company that allows consumers to pay for products they buy online in four equal, interest-free installments instead of all at once. At checkout, the consumer’s card is charged for a fourth of the total, and the rest of the cost is paid off in one-fourth increments every two weeks.
The service is available for use at select brands’ online sites, including Urban Outfitters, Forever 21, Kim Kardashian West Beauty and Steve Madden. When consumers shop at these sites, they can select Afterpay as their mode of payment at checkout. They will make an account—as simple as giving a name and birthdate and adding a debit card—and Afterpay will instantly either approve or deny the request. From here, the consumer pays off the purchase over the course of six weeks. If they are late on a payment, their account is suspended, and they will be unable to purchase anything else through Afterpay until the balance is settled.
“Our business model is based on people making automatic repayments on time. The better the customer is at paying off their purchases and using us again, the better it is for our business. Pay on time and the service is completely free,” Molnar said. “Unlike credit cards, Afterpay is not in the business of offering a $20,000 or even a $5,000 loan. We are not a line of credit; payments are attached to discrete products or services, which means that we can never be used for a gambling type service.”
As millennials move away from credit cards in an attempt to avoid crippling debt that has plagued generations past, Afterpay gives these consumers a platform to manage their budgets without the involvement of interests or a bank.
“I come from a generation that faces fundamentally different financial pressures—especially when it comes to education debt and housing affordability,” continued Molnar. “It’s why more than 85% of Afterpay customers use a debit card, not a credit card. And it’s why 70 percent of our customers say they’re using their credit card less, thanks for Afterpay.”
Afterpay is certainly shaking things up in online-retail, as it signs more and more brands to use its service with each passing month. The introduction of this web-based shopping experience is one of the many ways the online space is reforming the fashion industry for the better.
“We want people to be empowered,” Molnar said, “not entrapped by financial products.”
