E-commerce lender Afterpay will offer installment loans in stores

Point-of-sale lender Afterpay, which got its start financing online purchases, is now offering its installment loans to U.S. consumers shopping at brick-and-mortar retailers.

The arrival of an in-store option comes at a time when many traditional retailers are suffering from a drop in foot traffic due to the coronavirus pandemic. Afterpay says allowing in-store shoppers to finance their purchases in four installments could help US merchants increase sales.

“We want to be able to support them as they have the opportunity to expand and reopen,” said David Katz, global chief product officer for the Australia-based company.

Skechers is among the retailers that will offer US shoppers the option to pay for in-store purchases in installments using Afterpay’s digital card.

Bloomberg

Afterpay is surfing on a boom in new borrowing options that threaten to take market share from the credit card industry. The mobile-centric lender has grown rapidly since entering the US market in late 2018. It had 5.6 million active customers in the US at the end of June, up from 1.8 million a year earlier.

Afterpay allows buyers to split transactions into four equal payments due every two weeks. Its customers – often young adults buying clothes or cosmetics – don’t pay interest, although they can be charged late fees if they miss a payment.

Retailers give Afterpay just under 4% of the revenue they generate from sales, CEO Anthony Eisen said in an interview in early March.

Afterpay’s in-store offer is a digital card that can be added to Apple Pay or Google Pay. Once the card is set up, customers can use it to make contactless payments at participating retailers just like they would with any other card in their mobile wallet. The user interface informs shoppers of the amount of money they can spend and, once they have selected an item to purchase, the amount of each installment payment.

“We have a mostly millennial and Gen Z base, and they demand strong mobile experiences,” said Alex Fisher, US marketing manager at Afterpay.

The product has been in the works since before the coronavirus crisis and is currently available in pilot mode in select US stores. Upcoming launches are planned at retailers such as Forever 21 and Skechers. Afterpay has offered in-store financing in Australia since 2016 and reports that around 40% of its active Australian customers use this option to pay at checkout.

Some other point-of-sale lenders have also made their financing available to buyers in physical stores. San Francisco-based Affirm has been offering its installment loans in U.S. Walmart stores since early 2019.

Afterpay is one of many companies – including Sezzle – in the nascent consumer credit segment known as buy now, pay later. Both Afterpay and the San Sezzle are publicly traded in Australia, where their share prices have soared during the pandemic. Unlike traditional lenders, both companies have benefited from their heavy reliance on e-commerce revenue.

Sezzle’s average monthly underlying merchant sales in the quarter ended June 30 were $62.7 million, compared to $39.8 million in the prior quarter and $14 million in the same quarter. period a year earlier. The Minneapolis-based company announced a $55 million capital raise on Friday, saying it plans to use the proceeds to accelerate its growth strategy and strengthen its balance sheet.

Afterpay said on Monday that its underlying U.S. sales reached $1.1 billion in the quarter that ended last month, up 62% from the three-month period that ended last month. ended on March 31.

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