Why Steve Madden, Superga & Others Are Readily Embracing This Australian Fintech Firm

Afterpay, the wildly popular buy-now, pay-later platform from Australia, has continued its expansion into the U.S.

Footwear firms such as Steve Madden, Superga and APL have all added the service to their websites, joining more than 1,000 other U.S. retailers that have signed up to use Afterpay since it entered the country in May.

Through Afterpay, customers can choose to pay for their purchase in four equal installments, with the first payment charged immediately and additional charges recurring every two weeks until the total is paid off. If a retailer offers the service, payment through Afterpay is offered directly on the product page for a seamless checkout.

The buy-now, pay-later concept isn’t new, but Afterpay offers a twist: There are no interest fees, and any late fees cap out at 25 percent of the original item value. Instead, the company pays the full value upfront, taking on the risk, and makes its money by charging participating brands 4 to 6 percent of every transaction.

“We’ve shifted the economics in favor of the customer,” said Nick Molnar, Afterpay’s CEO. “Afterpay has been built to be the opposite of these digital credit solutions that are currently in the market.”

The appeal is particularly strong for millennials. With two out of three people 18-30 choosing not to own a credit card, there’s a clear trend for younger generations to spend their own money as opposed to borrowing. Moreover, many in this age bracket are living on strict budgets, making the option to pay in installments more financially appealing. Afterpay noted that 85 percent of its U.S. customers have a debit card, not a credit card, attached to their accounts.

Steve Madden product checkout page
Afterpay is easily accessible on the websites of participating retailers like Steve Madden.
CREDIT: Afterpay & Steve Madden

Afterpay lets retailers provide a better customer experience; not only are they making payments easier, but they’re also willing to pay a fee in order to do so. Molnar said this alignment of values is a key reason Afterpay has found success in the U.S. market.

“Over the past five to 10 years, the retail market has been pitched by many of these digital credit solutions, but from a footwear and fashion perspective, it didn’t align with how they wanted to represent their brand,” said Molnar. “When Afterpay was shown as an option, unlike credit making money from the customer, the retailer is prepared to pay that fee on behalf of the customer because of the results that they see.”

And they do see results. Afterpay claims retailers typically experience an uplift of 20 percent to 40 percent in order value — and with Afterpay paying the full value upfront, the retailer sees its revenue perform consistently with what it’s used to. At Steve Madden, which launched the service in the past month, Afterpay was the second-most-used payment method in the first week alone. According to Steve Madden, average order values rose 25 percent.

Afterpay hopes to establish as strong a presence in the U.S. as it has in Australia, where it has been running for three years and has more than 10 percent of the population signed up to the service. For footwear, in particular, the market has rich potential; in Australia, 1-in-4 e-commerce fashion and beauty purchases are made through the platform. In the U.S., the focus is on signing up as many retailers as possible, from independent stores to global behemoths. An in-store application was also recently tested at Revolve in New York, suggesting there is no need to confine Afterpay to online shopping.

“In Australia we’re a verb!” said Molnar. “People say, ‘I’ve Afterpaid it.’ And to get to that form of framework is exactly what we want to do.”

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