Afterpay: An Alternative (or an Addition) to Credit Card Debt?

As CivicScience reported in Q4 of 2019 in its Trend Adoption Tracker, consumer adoption of interest-free / payment installment programs at large (Afterpay, Paypal Credit, Affirm, etc.) has been growing overall, but was a bit stagnant from Q3 to Q4. For the uninitiated, these offerings act like layaway, but you get your hands on what you ordered long before you pay it off. 

But what does adoption look like for Afterpay, specifically, whose installment payment options are popping up everywhere these days, even to pay for $35 tubes of lipstick or $75 night serum? With over 90,000 U.S. Afterpay retailers and counting, CivicScience decided to take a glance at the Afterpay consumer (and persuadable consumer).

Looking at a survey of 4,100 respondents 13 and older, 9% of people have adopted or intend to adopt Afterpay’s services. Overall awareness is fair, but has a lot of room to grow as just over one-third of the gen pop have heard of Afterpay.

An Alternative (or an Addition) to Credit Card Debt

A past CivicScience study found a link between payment installment adoption and credit card debt. In regards to Afterpay, we see the same thing. Those who have used or want to use Afterpay are more likely to hold credit card debt than those who aren’t interested. What’s more: those unaware of Afterpay are just as likely as the adopters to have credit card debt, meaning the conversion rate might be high once they become aware of Afterpay’s offerings.

Whether related or not, those who have adopted or plan to adopt Afterpay don’t think too kindly of themselves in regards to how they manage money. Afterpay adopters and intenders are twice as likely as groups uninterested or unaware of Afterpay to say they manage their money badly. Whether or not Afterpay serves as a benefit or detriment to managing finances remains to be seen.

Income isn’t a significant factor. The study shows somewhat similar rates of adoption, intent, and awareness across income brackets, but it is notable (though not surprising that those who bring in over $100k / year are less aware of Afterpay. They may not need to break up payments, but is this a missed opportunity?

Gen Z Is Driving Afterpay

Those under 25 are much more likely to be aware of Afterpay, and either already adopted it or have plans to. This is the generation who will keep installment plans relevant. 

Cosmetics and Afterpay: A Perfect Match

The study revealed that people 13+ (male or female) who wear makeup are twice as likely as those who don’t wear makeup to have used or intend to use Afterpay. This shows that partnerships that Afterpay has with retailers like Sephora are quite literally paying off.

It’s All About the Little Things

Adoption of Afterpay among those who wear makeup matches overall sentiment for paying off smaller purchases / low-cost items in installments as well. 

More than half of Affirm users and intenders are the most likely to be interested in paying for low-prices items over time.

A whole lot of paying later is happening online and in-store. Is this way of paying just a fact of our future? What kind of impact, if any, will it have on consumers’ finances? CivicScience will continue to track adoption of these programs at large, and keep a keen eye on Afterpay, too.