Empowerment over limitations. Encouragement rather than preventative measures. Rewards instead of penalties. These are the enablers and incentives that would almost always be prescribed in order to properly aid and support happiness, success, and growth. They can be applied to improve just about every facet of life. But when applied to an individual’s finances, the freedom that often results can be immeasurable. With this objective in mind, to free consumers from the incapacitating clutches of credit card rates and fees, Afterpay has entered the Canadian market as part of its continued global expansion.

Founded in Australia in late 2015, Afterpay is the global leader in ‘buy now, pay later’ payment services. Working with more than 63,800 retail brands around the world and boasting over 11.2 million active users already, the company’s unique payment alternative is gaining momentum. Available in Australia, Canada, New Zealand, the United States, and the United Kingdom, where it is known as Clearpay, the service allows users to receive products immediately and pay for their purchase over four interest-free instalments. It’s a model that’s paving the road toward a transformation concerning the way consumers pay for their goods, while helping to turn the credit card industry on its head. And, according to Melissa Davis, Head of North America at Afterpay, the trends that have led to the consumer’s shift toward payment options like Afterpay continue to grow and are likely to impact purchasing behaviour and preferences well into the future.

“Over the past number of years, people everywhere have really started to reconsider the purchases they make and the way they choose to pay for those purchases,” she says. “Millennial and Gen Z consumers, for instance, are not only avoiding the use of credit cards, they aren’t even applying for them. And given the significant rate of e-commerce adoption that will only continue to increase around the world, the alternative offered by Afterpay – allowing users of the service to get what they want, when they want it and pay for it later – is helping to support the changing needs and preferences of today’s consumer.”

Rise of the Debit Card

In addition to the younger generations’ reluctance to use credit cards, a decision which has been impacted in part by their collective mountain of student debt, the impacts of the global pandemic have served to alter spending behaviour across all generations. Some analysts around the world reported a 50 percent decrease in credit card spending during the initial COVID lockdown as consumers everywhere became cautious and much more thoughtful with respect to their finances. And, in conjunction with a decrease in the use of credit cards came a rise in the number of debit transactions that were being made by consumers, increasing the use of Afterpay’s payment option and highlighting the flexibility and convenience that it provides for its users.

Consumers have also been drawn by the ease of use of Afterpay’s service. By simply visiting Afterpay’s site to create an account, users are free to start browsing their favourite retail brands and buying the product they want. Then, by selecting Afterpay as their choice of payment at checkout, 25 percent of the purchase is paid for upfront, with three equal payments scheduled to be made every two weeks for the following six weeks. And, what’s more, each payment is made by the user free of interest or any other fees and extraneous charges traditionally associated with credit cards. Davis explains that the entire Afterpay concept was developed with the consumer in mind and the objective to lift the weight and burden of borrowing from their lives, pointing to the accessibility of its services and the financial autonomy that it provides as the true benefits to the end-user.

“We never charge anything above and beyond the cost of the product,” she says proudly. “Ultimately, Afterpay provides a way to help consumers budget out their purchases and pay directly from their debit accounts without incurring any additional debt. In addition, users are never asked for their social insurance numbers. And we don’t do credit checks, either. Everything we do is in the best interest of the consumer, allowing them to use our service and pay for product with funds that they already have. It helps provide them with incredible freedom over their finances, unlocking opportunities that they didn’t previously have access to.”

Entrance into Canadian Market

Now, Afterpay offers the same financial freedom and opportunities to consumers in Canada. The company announced its entrance into the Canadian market in August of this year and is already working with brands in the country, including Roots, Aritzia, American Eagle, Ardene, BikeExchange, Dermalogica, FragranceX.com, Herschel Supply Co., Huda Beauty, GOLI, Maëlys Cosmetics, Native Shoes, Nixon, and Perfume.com, among many others. It’s a move that Davis says had been in the works for some time, and one that the company is extremely pleased to have made.

“We’re thrilled to be able to bring our option of payment to the Canadian market,” she says. “We’re excited to be supporting and broadening options at checkout for the consumer to help make their shopping experience easier and more enjoyable. And, we’re honoured to be working with some of the biggest and best brands in Canada, providing merchants across the country with our service to help everyone continue to grow and succeed, together.”

For retailers, Afterpay’s service is quickly becoming a must-have as over 90 percent of the company’s users pay with their debit cards. Davis also points out that many of the retail partners that Afterpay works with have experienced noticeable increases in average order values and conversion as a result of its service, as well as significant incrementality in sales from consumers who might not otherwise have been able to make purchases above a certain price-point. In addition, the payment option is serving as a tool for new customer acquisition for retailers as the Afterpay network helps to introduce consumers to brands that they may not have been familiar with before becoming a user of the service.

Promotion of Responsible Spending

Perhaps more important and impactful than the services that Afterpay provides consumers and retailers, however, is the message of responsible spending that the company helps promote – a message supported by the structure of its agreements with users. Payment notifications are sent to users ahead of due dates as reminders. And, if a payment date is missed, the user can no longer use the Afterpay service until their current balance is paid. It helps to set a precedent for the user and represents a real departure from the approach taken by credit card companies.

“The credit industry has been built to make money when their cardholders are late with their payments,” asserts Davis. “We’re seeing a consumer today that wants to be more responsible with their money. They want to better understand their purchases and are seeking transparency in the process to know exactly where their money’s going. Afterpay helps amplify the practice of responsible spending through the structure of our service, empowering consumers and helping them feel more confident in their purchasing and spending.”

Davis also lauds the functionality of the Afterpay service, whether it’s used on a desktop computer or on a mobile phone, describing it as a seamless online checkout experience. Leveraging a network effect, when users sign in to the Afterpay service, they are also signing in to all of its retail partners. This, combined with the fact that Afterpay users’ payment information is stored and protected securely across the network, helps to remove a lot of the friction and uncertainty that’s often associated with the retail checkout experience.

An Omnichannel Offering

In addition to the company’s e-commerce payment service, which is disrupting the online purchase experience in the best way possible from the consumer’s perspective, it recently introduced an in-store payment solution in the U.S. Available in Australia and New Zealand since 2016, Afterpay users south of the border can now leverage the payment option in-store via their Afterpay card, a virtual, contactless card stored in their digital wallet. The move represents what can only be seen as an enhancement to the consumer’s payment experience and further growth for the company that has only just celebrated a half-decade of business, highlighting its desire to continue providing consumers with the very best payments options possible. And, according to Davis, the positive impacts of Afterpay’s service on consumers and the retail industry are only just starting to take hold.

“We see the inclusion of our in-store solution as a powerful omnichannel tool to help support consumer needs and retail success across all channels. It provides consumers with the ability to leverage the Afterpay payment option online and in brick-and-mortar locations, and enables retailers to provide and maintain a consistent payment experience, whether it’s through their offering of buy online and pick up in-store, curbside pickup or any other purchase option they provide. It’s a solution that we want to roll out everywhere Afterpay is available. It supports our long-term vision to empower an economy in which everyone wins through the amplification and promotion of responsible spending practices and the removal of equity fees. With this as our focus, we’ll further develop our deep understanding of consumer preferences and the ways in which we can cater to them as we continue to make investments and expand our presence globally.”

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