Following their overwhelming success in Australia and the US, Aussie payment provider Afterpay has come to the UK. Capitalising on the success of ‘pay later’ checkout options, Afterpay enables brands to offer an alternative payment option to the standard ‘pay now’ gateways like PayPal.
Afterpay’s UK expansion comes as more and more retailers are starting to add ‘pay later’ options to their checkout. Following in the footsteps of payment providers like Klarna, who already operate in the UK, Afterpay gives customers the option to split the cost of their order into four equal payments.
‘Pay later’ is becoming an increasingly popular way of shopping, especially with younger customers. Acting as a sort of an antidote to costly payday loans, these payment options give shoppers the chance to buy products without having to wait around for their monthly wages.
What is Afterpay?
Afterpay is an alternative payment option that retailers can integrate with their online store. It means that brands can offer customers a choice of paying now, through traditional gateways like PayPal and direct debit, or paying later with Afterpay.
When a customer checkouts with Afterpay, they pay for their order in four equal interest-free instalments, due every two weeks. With no additional interest fees, it means they can make the payments when it suits them best.
Afterpay is already integrated with over 17,000 stores, including high-end brands like Pandora, Tommy Hilfiger, Diesel and Mac. With 2.3 million active customers worldwide choosing the Afterpay checkout, there’s no question about the demand for delayed payment options, especially in the fashion and beauty industry.
Afterpay isn’t a line of credit, which means your customers won’t have to pay interest if they choose to split their payments. As long as a customer makes their repayments on time, they’ll only ever have to pay for the price of their order. No hidden interest charges, no bad shopping experience – just easy, transparent payments for your customers.
The Afterpay sign up process is incredibly easy, both on the app and online. With no new card applications and instant online approval, it’s quick and simple for customers to sign up and carry on shopping.
Automated payments & reminders
With automated repayments, Afterpay makes it easy to never miss a deadline. Customers are sent an email reminder a few days before the direct debit, helping them feel on top of their repayments with no nasty surprises.
Afterpay in store
Retailers also have the option to integrate Afterpay with their in-store point-of-sale software. After downloading the Afterpay app and creating an account, customers are given a unique barcode to scan at the register, splitting the cost of the purchase into four easy-to-manage payments. The app also lets customers view and manage their orders, meaning they can keep track of upcoming payments.
Having the option to Afterpay in store as well as online helps reduce buyer hesitation, especially when the buyer has an armful of clothes and an empty wallet. It can be that final push they need to get them from the dressing room to the checkout without second-guessing their decision on the way.
Increase your average order value
So, what’s in it for the brands?
One of the best things about Afterpay is that it has a massive impact on average order value and conversions. It can feel a lot easier to part with £50 every two weeks than £200 all at once, which can sway customers to add more to their basket.
These split payments are especially great for high-end and luxury brands like Mac. Afterpay shows customers an affordable way to pay for more expensive products they might not be able to justify buying otherwise, helping brands reach a whole new market of customers.
Beat buyer’s remorse
Another win for brands is that Afterpay helps reduce buyer’s remorse – that instant feeling of regret when you part with a load of money. Having a negative emotion associated with the shopping experience can not only increase return rates but also reduce the chance that a customer will shop their again.
Having alternative payment options like Afterpay helps beat that instant feeling of regret, taking smaller and less noticeable chunks out of the customer’s bank account instead of one big sum.
Risk-free for retailers
Even though Afterpay customers split the cost of their order, retailers still get guaranteed up-front payments. Afterpay settles up with retailers quickly and automatically, with no complicated processes or lengthy wait times.
Afterpay also assumes the risk for non-paying customers, meaning retailers get paid no matter what happens after the purchase.
Should you have ‘pay later’ options at the checkout?
The short answer is yes, absolutely. ‘Pay later’ can be the difference between a new order and an abandoned checkout. And the more big retailers start adding these options to their checkouts, the more your customers will come to expect flexibility with their payments. If you’re a fashion, beauty or lifestyle retailer, you should definitely be considering adding alternative payment options to your store.
Both Klarna and Afterpay are great 'pay later' options, but they work in different ways. Klarna only offers interest-free repayments if your customer chooses to pay later in one lump sum. If the customer chooses to 'slice' their repayments, Klarna charges customers 18.9% APR. Afterpay’s alternative to 'Slice it' remains completely interest-free, meaning your customer won't be charged extra for choosing to split their repayments. With no additional costs for your customers, Afterpay is a safe and secure way to build customer loyalty, increase conversions and give your customers an exceptional shopping experience.