IF YOU’VE been online shopping lately you might have seen these magic four little words — “Shop now. Pay later”. Here’s how it really works.-by melbourneTv
IF YOU’VE been online shopping lately you might have seen these magic four little words — “Shop now. Pay later” tempting you to head straight to checkout.
Getting to take home a new top and only having to cough up a quarter of the price sounds too good to be true, but it’s part of a new payment system that’s set to replace lay-by.
Australian retailers have begun to partner with two services, AfterPay and zipPay. They allow you to take home your item but then pay it off in instalments.
For example, with a $100 dress you’ll have to pay $25 upfront, then pay $25 each fortnight until you’ve paid it off completely.
AfterPay takes your debit or credit card details and automatically deducts the payments from your account, so you don’t have to remember to do it.
“The customer pays nothing extra,” AfterPay co-founder Nick Molnar told news.com.au. His company makes money by asking retailers to pay a percentage of the total cost of the item you purchased.
“It varies based on the volume of sales. They’ll pay 4-6 per cent of the order value,” Mr Molnar said.
“The retailers are prepared to pay the fee because the reaction that our customers have towards AfterPay is tremendous. The uptake that we get on retail is 20-40 per cent of total transactions. In the first week we went live on General Pants we processed more than 20 per cent of their online sales.”
So far 1500 retailers have signed up online and another 250 allow you to use After Pay instore. The company launched 18 months ago, but in recent weeks has just signed with big brands including Sheridan, Country Road, Witchery, Mimco, Super Cheap Auto and Rebel Sport.
“Naturally our retailers start online but the root objective is to move in store. Everyone wants to replace lay-by,” Mr Molnar said.
“From the customer’s perspective, they want to take the item home. They want to take the dress home and wear it on the weekend and the retailers want to get rid of that stock.
“They don’t want to store the product and they don’t want the customer to have to remember to come into the store. They’d prefer it to be automated.”
National Retail Association CEO Dominique Lamb is a fan of services like AfterPay.
“We support any new technological platform that makes shopping more convenient. A more convenient shopping experience for consumers will likely have a flow-on benefit to retailers in increased sales,” Ms Lamb said.
“Especially as we head into Christmas, the NRA encourages retailers to consider embracing any new technology that will help boost sales.
“While there is a fee associated for merchants who sign up with a service like AfterPay, if retailers feel that the service is convenient for customers and results in increased sales then I’m sure the industry will embrace this new technology.”