According to a new research conducted by Accenture in 2020, leading Buy Now Pay Later service provider Afterpay "drove $3 billion in net benefits and $6 billion in incremental sales for retailers and SMB owners, overcoming the pandemic and Australia's first recession in 30 years.
In its "Afterpay Economic Impact Report 2020," Afterpay highlights the benefits it produced on the Australian economy: job creation, driving additional business for retailers, supporting the local fashion industry, and helping consumers to avoid credit card fees.
"The $6b in incremental sales for retailers in 2020 included $510m for regional merchants, many of whom were also going through financial difficulties following the bushfires of late 2019 and a halt on tourism, accounted 75% growth in sales to metro and regional customers year on year," the report disclosed.
The Accenture report added that "Afterpay drove this jump in retailers’ incremental sales through improved online checkout conversion
rates, larger customer basket size, exposure to new customers, increased customer engagement and a rise in repeat purchasing (frequency)."
The report claimed that 43% of the merchants increased their sales by more than 10% after adopting Afterpay.
"The $3 billion in net benefits for retailers were driven through multiple channels. These include reducing customer acquisition costs, lower return rates, and cost efficiencies through online sales," it further stated.
"This report reinforces that both consumers and merchants win in the Afterpay revolution," says Andrew Charlton, Accenture Managing Director.
"For consumers, Afterpay offers the ability to budget and simplifies purchasing without the payment of interest and credit card fees."
He also claimed that "Afterpay was an invaluable sales channel for retailers and small buusinesses during the pandemic, and the financial service "allows them to connect to internet-savvy, budget-conscious consumers while at the same time, growing their topline and improving operating efficiency."
A major benefit, according to Afterpay, is the ability to spread out payment without incurring interest and account fees charged by credit card providers. The report found Afterpay users saved $110 million compared to what they would have paid making the same purchases with credit cards.
Including late fees, "Afterpay users averaged 0.6% costs over purchase price, compared to an average 2.1% costs per credit card purchase. Benefits were evident across every consumer profile, with vulnerable Australians benefitting most from switching to Afterpay and away from credit cards."
The pandemic further accelerated the decline in consumer preference for credit cards as consumers controlled overspending, and the gap between the value of debit card and credit card purchases widened from 8% in January to 35% in December 2020.
We've been told that "90% of Afterpay users prefer the platform because it improved their budgeting skills."
According to the report's calculations, Afterpay's fostered 63,000 jobs, including 11,000 jobs directly employed by merchants in sales oeprations and an additional 33,000 jobs supported indirectly in areas such as logistics, advertising, and market research.
Afterpay "offers customers interest-free payment plans for online and instore purchases. Since it began in 2015, Afterpay has evolved to become a widely accepted payments platform, operating in seven countries."
Here's the infographic from the report: