- As buy now, pay later services proved popular over the Black Friday shopping weekend, Afterpay has seen a 34% increase in in-store and online installment payment orders this holiday season, the payments platform announced Tuesday.
- Among the top categories with U.S. shoppers this year were fashion, footwear, beauty, homeware and fitness, Afterpay found. The top-selling items purchased using its installment payments were clogs, weekender bags, trucker hats, pajamas and shoes, according to the announcement.
- Afterpay found 11% more Gen Z shoppers using buy now, pay later options between Black Friday and Cyber Monday compared to last year, according to its sales figures. Overall, the platform also found a 30% year-over-year increase in its users spending online.
Though this year's holiday shopping season has yielded mixed results so far, buy now, pay later platforms have seen a rise in consumer demand. Compared to 2019, installment payment spending increased by 422% and order volume spiked by 438% in November, research from Adobe found.
Afterpay's uptick follows the platform's entry into in-store payments. In October 2020, Afterpay enabled shoppers to make installment payment purchases via a contactless, virtual card in their digital wallet. In March, the company hosted its fifth bi-annual Afterpay Day event in which customers could use its service in-stores and online across various brands and retailers.
"As we celebrate another holiday season in the pandemic, consumers were eager to gain a sense of normalcy and spend on gifts for themselves and loved ones," Zahir Khoja, Afterpay's general manager of North America, said in a statement. "Compared to previous Black Friday and Cyber Monday weekends, we're thrilled to partner with even more U.S. merchants to offer Afterpay's convenient and flexible payment method — revitalizing brick-and-mortar spending and helping consumers budget before the new year."
Amid this period of growth, payments providers and retailers are also looking to offer the service to customers. Target introduced Affirm and Sezzle's installment payment options in October, and Mastercard recently announced that it would launch a buy now, pay later option sometime next year.
Yet, some question whether the advantages of installment payments are worth the risk to consumers and providers.
Fitch Ratings released a report this year indicating that borrowers attracted to buy now, pay later services may not repay the balance if they face financial hardships. And because providers don't often report their customers to credit bureaus, they may not accurately assess borrowers' debt levels. In November the House Financial Services Committee's Task Force on Financial Technology held a hearing during which Marisabel Torres, director of California policy at the Center for Responsible Lending, testified regarding the potential risk of buy now, pay later services damaging young people's credit and overloading them with debt.