How Afterpay becomes the king of “buy now, pay later” services
Buy now, pay later: that sounds too good to be true.
Yet Nick Molnar, co-founder and co-CEO of Afterpay, has built an entire business around layaway financing – no credit checks, no interest, and no fees.
Anyone with a bank account in the US, UK, Australia, New Zealand, and Canada can use Afterpay to buy anything (and as much) from partner stores on the platform. Payments are divided into four installments, with an upfront payment due at the time of purchase and the remaining portions due over a six-week period. Think of Afterpay as a credit card service with none of the downsides.
After witnessing the setbacks of the 2008 financial crisis – and seeing many consumers (especially millennials) shift away from credit cards as a result – Molnar wanted to create a platform that made shopping more accessible while remaining fiscally responsible. “[The founders of Afterpay] decided early on that we never wanted our consumers to go into debt, ”said Molnar Grab in an interview. “We keep the interests of our consumers at heart. “
Molnar grew up in retail, with his family in the jewelry industry and later his own online jewelry business, based in his college room. “Growing up in retail gave me insight into business dynamics,” he says, noting that this dynamic changed after the 2008 financial crisis sparked a global wave of budget anxiety. Much like a phoenix, Afterpay was born out of the protest and tragedy that surrounded the economic crash, says Molnar.
“Our vision about justice and financial freedom is something that we are concentrated everyday.
Brainstorm with his neighbor, Anthony Isen – who lived opposite Molnar’s parents in Australia – Molnar started his layaway business in 2014, later securing a first round of investment in 2015. Afterpay went public at the Australian stock exchange the following year, he said, adding that “from that point on, [the company] scaled up pretty quickly.
A new way to shop
Buy now, pay later, the platforms have now grown into an industry of their own: Klarna, Affirm, and Zip from some of the options available, while existing companies like PayPal have created their own layaway services and bought others. As one of the first platforms available, Afterpay has partnered with Millennial and Gen Z brands like Urban Outfitters, Sephora, Target, Foot Locker, REVOLVE, Bed Bath & Beyond and Following. Yet with the growing number of layaway services available – and the growing number of users – any store may soon offer an option to buy now, pay later.
Molnar is hoping that kind of growth will occur, especially as Afterpay will also expand from online shopping to in-store purchases. “The gap between income and prices is only widening,” he said, referring to the economic divide that many buyers, especially teenagers, are experiencing. “Our vision of fairness and financial freedom is something we focus on every day. Currently, Afterpay has a total of 20 million users in the United States alone, with an average consumer age of 33. Gen Z is the fastest growing layaway service consumer base, according to the company.
As Afterpay becomes available in stores, its accessibility factor will also bring shoppers to physical locations, which have seen a significant drop in foot traffic during the pandemic. The layaway service “compliments” retail stores, says Molnar, offering direct-to-consumer services like dressing rooms and vendors as well as feasible payment methods.
Afterpay’s accessibility guarantees its retail partner more business, according to Molnar – but with trends increasingly rapid thanks to social media, such access can become unsustainable. Young consumers, influenced by Instagram and TikTok, buy fashions that last for weeks or even days; Afterpay makes these trendy pieces available. The endless and perhaps overly accessible cycle encourages customers to overconsume.
” We dont do credit checks, and U.S never represent charge interest. ”
“We don’t do credit checks and we never advocate charging interest,” says Molnar, saying these user-friendly features also prevent consumers from abusing Afterpay. “The moment someone is late on a payment in installments,” he says, “he cannot continue to transact until he has paid.” By operating unlike a finance or credit card company, Afterpay minimizes losses while protecting consumers, Molnar adds.
Most recently, Molnar’s inclusive layaway service made an appearance at one of the most exclusive gatherings in the world: New York Fashion Week. A series of live races and interactive events gave consumers the chance to purchase new collections (and pay later), style freshly launched pieces, and celebrate the accessibility of fashion.
On TikTok, Afterpay devotees joked about how the platform would provide even more opportunities, saying they could soon use the layaway to buy a mansion next to Kylie Jenner’s. At this, Molnar laughs, saying he likes the idea; Maybe Afterpay will expand to the real estate market as well. As of yet, there are no plans to do so – but for Molnar, nothing is out of the question.