How Afterpay Enables Responsible Consumer Spending During Inflationary Times

Afterpay mitigates consumer risks with dedicated consumer protections that allow customers to shop now and pay later in a responsible way. 

Following the turbulence created by the coronavirus pandemic, the US economy is now being buffeted by a new headwind – inflation. From gas to groceries, inflation has reached a 40-year high, accelerating the adoption of Buy Now, Pay Later (BNPL). With 39% of Millennials and Gen Z using BNPL more due to inflation, it’s become an effective tool to help consumers manage their finances and budget for everyday purchases. Given its exponential growth as a new and successful way to pay, we recognize the need for education of our service and how Afterpay balances accessibility with responsible spending. 

Unlike traditional credit or other BNPL providers, Afterpay’s platform is built to encourage responsible spending, with consumer safeguards that are fundamental to how Afterpay works – meaning customers can’t revolve into debt with expensive fees and interest. 

Afterpay’s core consumer protections for responsible consumer spending, include: 

1. Customer spending limits start low (average order value is less than $150) and increase over time with positive customer repayment history.
2. If a single payment is missed, the consumer cannot use our platform, which ensures that they can’t fall into the revolving cycle of debt. 
3. Afterpay offers a hardship policy and allows for a flexible payment arrangement without charging any additional fees. 
4. Soft credit checks were introduced for US in-app customers to help customers spend within their means – creating a healthier, more responsible customer base for our merchants and for our platform.  

These safeguards have proven our customers are less likely to fall into debt, as 95% of Afterpay installments are paid on time, and 98% of purchases incur no late fees. In fact, Afterpay US users are more than twice as likely to make repayments on time compared to credit card users in almost every age group. Visible spending limits and an easy-to-understand breakdown of repayments ensure consumers are clear about their repayment schedule, and we see customers turning to Afterpay to help manage their finances and budget – especially because shoppers can time their Afterpay payments to paycheck cycles. 

To reward responsible spending and repayment behavior, Afterpay also offers Pulse Rewards, a unique loyalty program that recognizes members for paying on time. This is the complete opposite of how credit cards loyalty programs work, which entice and reward consumers for spending more, and one in five Afterpay customers are part of our Pulse rewards program.

Although BNPL is just a small portion of the entire US payments system, it’s been recognized as a payment disruptor that’s here to stay, especially as Gen Z and Millennials turn away from credit. As a leader in this space, Afterpay’s mission remains unchanged – to power an economy in which everyone wins and enable younger shoppers to spend responsibly in the midst of this inflationary environment.