Gladys Tamez designs custom cowboy and cowgirl hats with a modern twist of color and shapes. She studied the art of millinery in Monterrey, Mexico, and Florence, Italy.
“To me, a hat is a sculpture. It’s an art form. That’s how I see it,” she says. Her loyal customers, from 18 to 84, see it too. Men and women love her designs, and they buy multiple hats as luxury fashion accessories.
However, luxury has its price. Her hats sell from $400 to over $1,200 each, and the price was an obstacle for many buyers. Younger customers kept asking Tamez if she offered a buy-now-pay-later (BNPL) plan so that they could afford to buy.
Partnering with Afterpay opened her business to a much wider audience, along with thousands of retail companies like hers. Afterpay’s BNPL option has measurably increased revenue, attracted more customers, and continues to scale Tamez’s online business.
This article will peek behind the curtains and see why merchants and their customers love its flexible payment plans.
What is Afterpay, and How Does It Work?
AfterPay is a buy now, pay later (BNPL) payment gateway. It fills the gap for people who can’t get or won’t use a credit card. It allows customers to purchase what they want and pay for it over six weeks with no interest penalties. It’s the same idea as a layaway plan, except that Afterpay took the concept and made it better for retailers and customers. Shoppers get to take their item home or deliver it right away with just a minimum payment.
Another term for BNPL plans is “point-of-sale loans.” Companies loan the shopper the money by paying the total amount to the merchant. Merchants get paid in full, and Afterpay guarantees the payment. Retailers don’t have to manage or store the item like outdated layaway plans. They can sell more merchandise because the buy-now-pay-later concept lowers the purchase threshold to 25% of the item’s total price.
The payment platform is an intermediary between a retailer and the customer. Once the customer initiates the purchase, Afterpay pays the retailer the full amount. Then the customer pays the money back in four equal payments every two weeks.
Offering the BNPL Option Increases Sales
Helping customers get what they want without charging extra is an excellent way to sell more and increase brand loyalty.
Merchants who offer this no-interest payment option report an average 22% boost in cart conversions, a 40% increase in AOV, and up to 30% more new customers. Clothing retailers report that shoppers using Afterpay typically add two to three more units to their carts, increasing AOV (Average Order Value) up to 50% more per transaction.
For more tips on increasing sales, check out this resource on the best ways to increase eCommerce sales.
Helps Attract New Customers
It’s disheartening when shoppers leave your store because they can’t afford an item. Afterpay overcomes that challenge. Allowing customers to take home their purchases for only a 25% minimum payment opens stores to a broader audience by making goods more accessible.
U.S. consumer spending using a BNPL has grown 230% since January 2020, and the market is growing. Almost 75% of BNPL users are Gen Z and millennial shoppers, with Afterpay the most popular.
Sherri McMullen owns a contemporary fashion boutique in Oakland, California. She said that accepting Afterpay from customers supports her business’s commitment to inclusivity and accessibility. McMullen explained, “We’ve seen an increase in a younger demographic, and we can reach more consumers by allowing more flexible payments.” Businesses that offer Afterpay see a 30% increase in new customers in many cases.
Customers Can Buy What They Want
The advantage to shoppers is they can buy now and pay later without using a credit card. The first payment is 25% of the purchase price, then Afterpay splits the balance into four payments, payable every two weeks.
While there is no credit check, first-time customers must set up an account and meet the following qualifications:
- Be 18 years of age
- A resident of the US and reside within the 50 states or District of Columbia
- Link to actual content rather than footers or sidebars
- Capable of entering into a legally binding contract
- Need a working mobile phone number and valid email address
- Authorized to use a US-based debit or credit card—Visa, Mastercard, or AMEX
Customers can download the Afterpay app and fill in the application right from their phones. They receive an instant notification, and if approved, a shopper can pay using the app or download a virtual card that they can use in-store.
It’s an excellent opportunity for retailers to grab impulse buyers and boost product promos and sales.
It’s Easy to Use
When shoppers want to pay in-store, they use their phones and just tap the “CARD” button inside the app. The card will appear in either Google Pay or Apple Pay wallet. They follow the prompts to complete the transaction like any eWallet.
For online purchases, shoppers need to open the app on their smartphone and browse through stores that offer Afterpay. They tap on the store from the list and shop as usual. There is no cost for the shopper to use the app.
Interest and Late Fees
There is no interest, but a late fee applies until the bill gets paid. They cap the fees at 25% of the total purchase, which is much less expensive than credit card fees.
Does Using the App Affect Their Credit Score?
The company doesn’t run a credit check or report to the credit bureaus. Using Afterpay does not affect anyone’s credit.
Working with Returns
If a customer wants to return a purchase and is eligible, Afterpay works within the retail company’s return policy. Use the app to process the return as with any credit or debit card. It takes about ten days for the money to be restored.
BNPL plans are convenient for shoppers on a budget. The appeal is irresistible and has proven to increase sales.
7 Ways to Drive More Sales
Get the Word Out on Social Media
Retailers can spread the news that they offer Afterpay by adding CTA buttons or logos to their posts and product photos. It’s a proven method to inform existing customers and attract new shoppers.
Proper Page Placement Above the Fold
Afterpay provides merchants with all the links and landing pages for quick and easy signup. Place a direct link to the sign-up page in a prominent position on the home page. Keep it as close to the top as possible to reassure shoppers before exploring your site.
Add Afterpay to All Product Pages
Reminding customers that they have a BNPL option helps to reduce cart abandonment. Position the Afterpay logo next to the “add to cart” button on every product. It increases the number of buyers that will complete the purchase.
Email Drip Campaign
Besides regular nurturing email sequences, consider sending dedicated Afterpay email reminders. It’s an effective sales technique for higher ticket items. They can order or book now without compromising their short-term cash flow.
Signs, Decals & POP Displays
Brick and mortar retailers can benefit from Afterpay’s point-of-purchase signage and displays. They help trigger impulse shoppers by reminding them that they don’t need to pay for everything now. At checkout, the Afterpay reminder works well for premium brands in fashion, hair salons, travel, gourmet foods, and more.
Don’t Forget About the Footer
Adding a link to an information page about Afterpay builds consumer confidence. Shoppers can learn all they need to know about signing up and how it works. They can get instant verification and buy what they want.
Pop-Ups and Dedicated Modules
Having a pop-up that tells shoppers, they can buy now and pay later is an excellent way to greet them. Some eCommerce stores have a module on the home page with a brief explanation and link to Afterpay’s sign-up page.
These methods have proven to pay off with more business and new customers.
Is This “Buy Now Pay Later” Different From the Others?
What makes Afterpay different from the other BNPL platforms is its business model. It makes money from the merchant fees, not from the consumer. They don’t charge consumers interest, set-up, or account management fees, which is how most other platforms derive their revenue.
To minimize losses to the company and prevent the customer from sinking deeper into debt, they will freeze an overdue account. Afterpay is a responsible lender, unlike credit cards and other lenders. They cap late fees at 25% of the owed amount, ensuring that debt won’t spiral out of control.
Afterpay offers only the 4-pay option, and it’s why they don’t charge interest or require a credit check. The company helps merchants drive more sales by providing them with marketing assets. Go to Afterpay’s retailer resources for more information and downloadable materials to see what is available.
Chat with us today if you need help partnering with Afterpay for your eCommerce store.