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Published: 8 Jun 2018

Payment in Instalments: Afterpay Targets US Millennials


Australian buy-now-pay-later digital tool Afterpay is making a foray into the US market in partnership with US lifestyle retailer Urban Outfitters, which has launched the service across its e-commerce sites.

The tool aims to entice the post-recessionary debt-conscious mindset of US millennials – less than a third of whom own a credit card (Bankrate, 2016).

Founded in 2014 in Sydney, the platform allows consumers to pay for products from $35 to $1,000 in four equal instalments, due every two weeks, and receive their purchase before paying it off in full. Consumers browse the retailer's website, select items they want to buy and select Afterpay as their payment method. Afterpay collects the money automatically from users' accounts and does not claim any extra charges for the service, provided the instalments are paid on time. The late payment fee is $10, and a further fee of $7 is applied if the payment is not made within a week, and then the account gets blocked.

The tool has been successful in Australia, where it has over 1.8 million users and collaborates with more than 14,000 retailers, including French beauty giant Sephora and Canadian athleisure brand Lululemon Athletica. According to Afterpay, its service boosts both conversion rates and incremental sales by 20-30%. The company also claims that Afterpay users have a higher average basket size and buy more frequently than other consumers.

For more on how retailers are courting shoppers' price-conscious mindset, see Budget Retail's Quality Drive. See also Thrifty Millennials Turn to Refund Apps and Fast-Forward Finance.

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