Shoppers have been looking for alternative ways to finance their purchases, with recent surveys reporting an increase in the use of credit card rewards and installment payment plans. Now, Afterpay customers in the U.S. will be able to use the company’s “buy now, pay later” solution in-store at participating merchants, to help stretch their finances.
Until now, customers have only been able to pay through Afterpay’s four-part installment plan when shopping online. The application lets shoppers receive their item after paying 25% of the retail price upfront; the remaining 75% is paid through subsequent interest-free payments, every two weeks. This budgeting tool is an alternative to credit cards, which are less popular among younger shopping demographics due to concerns about accruing debt.
Through new partnerships with Apple and Google, Afterpay users are now able to create an Afterpay Card in their digital wallet. This is a contactless, virtual Visa card that can be used through Apple Pay or Google Wallet when checking out with mobile at participating brick-and-mortar retailers. Retailers that accept mobile payments but are not Afterpay partners will not be able to accept the Afterpay Card.
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This announcement comes as a number of states have begun to reopen retail stores. While the return to in-store shopping has been slow, with a number of consumers choosing to stay online until safety measures are proven, new offerings could attract traffic. Consumers may also now expect the same experience from brick-and-mortar as they get from e-commerce, such as one-click checkout and installment payments.
Afterpay initially restricts the amount that a user can spend through its application, extending the amount over time as users demonstrate financial reliability. This balance is available to view through the digital wallet and, if a purchase is within this limit, users can complete the transaction through a one-tap process. The remaining payment schedule is then shown on the screen, to ensure users are aware of when they will be charged.
Existing users will not need to input any new information in order to create the card; only a one-time activation is needed. New users will need to provide the same information required to establish a digital account: name, phone, address and an existing credit or debit card. No credit checks are conducted and shoppers do not need to share their social security numbers, and Afterpay estimates that signup takes less than one minute.
Afterpay has already rolled out the in-store function in Australia, the company’s home territory. Currently, 40% of active Afterpay users in Australia have leveraged the in-store solution, and these omnichannel shoppers spend an average incremental of 178% year over year.
Alongside the brick-and-mortar application, the company has provided a playbook for its merchant partners. This includes best practices, assembled from data points collected from the 40,000 storefronts currently operating the solution in Australia. Sample topics include store team training, visual merchandising, co-marketing and shopper resources.