Cash-Strapped Millennials Are Turning to Installment Plans to Pay for T-Shirts and Jeans

Sharing is Caring!

via Bloomberg:

Installment plans have helped shoppers afford large purchases since the late 19th century and are still available for pricey items like cars and smartphones. But to delay payment for a T-shirt and a couple pairs of jeans, you needed a credit card. Now several fintech startups are putting smaller purchases on installment, too. Max Levchin Source: Affirm

Earlier this year, Australia’s Afterpay began offering installment plans in the U.S., joining Affirm, a San Francisco startup launched by PayPal co-founder Max Levchin. Square announced its own installments plan in October; so did Swedish payments company Klarna, which has teamed up with H&M to offer services in 14 markets it didn’t name.

Consumers apply online or via app and learn whether they’ve been approved in seconds. They click a button at checkout on the websites of participating retailers if they want to pay by installment. Cotton On, which sells inexpensive apparel, began offering U.S. installments through Afterpay in August. E-commerce chief Brendan Sweeney says 20 percent of buyers are already using the feature, which breaks up bills into four equal parts spread over six weeks and charges no interest.

See also  UK: Boris Johnson plans to delay June 21st lockdown lift until July 19th...

Afterpay Touch Group Ltd. caught on quickly with Australian millennials, many of whom abandoned credit cards after the 2008 recession. Founder Nick Molnar was a teenager when the crisis hit and understood intuitively that his contemporaries would approach credit differently from their forebears.

The company charges no interest, instead collecting a fee of as much as 6 percent of a sale from the retailer. Afterpay works with 20,000 merchants globally—including 1,000 now online in the U.S. where the company has signed up Urban Outfitters, Anthropologie and Free People.

See also  Fox News Guest Says AOC And Childless Women Have The Minds Of Children, Millennials ARENT Growing Up

Afterpay is betting American millennials will be just as keen on its service as their Australian counterparts. The company says 65 percent of the U.S. cohort don’t have a credit card, are 30 on average and are intrigued by using installments to pay for merchandise. Leslie Parrish, a senior analyst at researcher Aite Group, says the simplicity of installments is at the heart of the appeal. “You know precisely when you’ll pay off that loan,” she says. “That gives you more discipline.”


h/t COMPUTER1313


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.