Afterpay delivers billion-dollar boost to Aussie businesses
A new report shows that Afterpay delivered billions in incremental sales and benefits to businesses around the country.
It was a year that saw inflation soar, and the cost-of-living crisis become so pervasive that it even earned its own nickname – “cozzie livs”.
Yet, even as retail sales flattened in 2023, Afterpay helped fuel billion-dollar growth for Australian businesses, a new report has found.
Afterpay’s Economic Impact in Australia revealed that in 2023 Afterpay delivered a number of benefits to businesses and consumers.
Benefits to businesses in 2024:
Helping merchants generate $9.6b in incremental sales.
Saving businesses $711m through cost efficiencies.
Contributing $3.9b to Australian GDP.
Enabling the direct employment of 27,000 people.
Enabling Aussies to save $127m in credit card fees thanks to Afterpay’s zero-interest model.
Afterpay helps drive $9.6b incremental sales.
Over the past year, cost-of-living pressures have intensified and business closures have ramped up, but Afterpay’s 3.5m customers continued to spend.
In total, Afterpay’s customers spent $13.4b with Australian businesses. Of this revenue, $9.6b was incremental sales, generated thanks to more repeat purchases, larger customer basket sizes and higher customer retention.
“Afterpay has contributed heavily to our topline growth,” attested South Australian business GiftBox, which has 279 stores across Australia, as well as an online presence.
“The average order for Afterpay baskets is 2.5 times higher than other payment methods and in sale periods the value is four times the average credit card basket.”
"Afterpay has contributed heavily to our top-line growth."
However, for businesses, the benefits of offering Afterpay went beyond sales, the report found.
Afterpay delivers cost efficiencies to merchants.
At a time when customer acquisition costs have soared, Afterpay helped businesses reach new customers and grow their audience. According to the report, 65% of merchants reported exposure to new customers – partly through Afterpay’s shop directory – which, in turn, reduced overall business costs.
The report found that merchants that offered Afterpay saw lower return rates, reduced fraud costs and lower customer service costs. Together, these efficiencies were worth $711 million.
Afterpay supports a diverse merchant base.
Afterpay merchants can be found across the country, wherever Aussies are doing business, and they span every industry from fashion to floristry, toy shops to travel agents.
By providing a boost to businesses, Afterpay helped bolster the resilience of a diverse array of businesses, including 123,000 small-to-medium-sized businesses, as well as a significant number of businesses that are run by women (31%) and younger owners (32%).
Afterpay helps younger consumers avoid credit fees.
But it wasn’t just business owners who enjoyed the benefits of Afterpay in 2023; there were plenty of upsides for consumers, too.
Afterpay Economic Impact in Australia found that Buy Now Pay Later is particularly popular among younger consumers, who are more likely to use BNPL for unplanned expenses than a credit card, for example.
The popularity of BNPL means that many consumers are no longer paying high credit card fees. In fact, the report calculates that Afterpay users saved $127m in credit card fees by switching to BNPL.
Many BNPL users reported that they found BNPL less stressful than using credit cards, and analysis shows that consumers with credit cards had 10 times larger outstanding balances compared to BNPL.
Want to find out more about Afterpay’s economic impact in Australia? Download the full report here.
Source: Afterpay’s Economic Impact in Australia, June 2024.
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