The holiday shopping season delivered strong results for online merchants, with buy now, pay later continuing to influence consumer spending habits. Afterpay reported larger transaction sizes and increased merchant referrals during the 2020 holiday season, underscoring the growing role of flexible payment options in e-commerce.
As consumers embraced contactless shopping and omnichannel experiences, services like buy online, pick up in store (BOPIS) and digital wallets complemented the rise of buy now, pay later. Together, these payment innovations helped retailers boost conversions and average order values during a critical shopping period.
Online merchants found some joy in the recent holiday shopping season. Afterpay reports that U.S. 2020 Q4 transaction size was up 30% compared with the same period in 2019. It helped that holiday buying got off to an early start in October since retailers moved their traditional Black Friday deals earlier in the season.
Then the increased popularity of Buy Now-Pay Later (BNPL) provided added lift as well. Afterpay now offers an in-store purchase option that links to either Apple Pay or Google Pay. How fast consumers return to in-person shopping remains an open question, with Q3 probably being most likely, given the current Covid status. In the meantime, online BNPL will continue its upward trend.
The following excerpt from a Yahoo Finance article reports more on the topic:
Afterpay released consumer shopping trends for the Holiday 2020 shopping season for October 1st through the end of December 2020. Based on this data, consumers expanded their gift giving lists and shopped for more items compared to last year. The average basket size for Afterpay customers in the US increased by 30% when comparing the 2020 and 2019 Holiday shopping seasons. Traffic to Afterpay’s brand partners was also strong, as the company saw a 145% year-over-year increase in referrals to global merchants from its Shop Directory.
Alex Fisher, VP of Retail for Afterpay said: “As shoppers returned to stores this holiday season, we saw a rise in services like Buy Online, Pick Up In Store (BOPIS) and contactless payments. Afterpay is at the forefront of these safe and seamless shopping experiences. According to a recent survey of Afterpay in-store shoppers, 32% of customers had never used contactless payments prior to trying it with Afterpay.”
The holiday results reinforce how buy now, pay later has become an important driver of online retail growth. By offering shoppers greater payment flexibility while supporting digital and in-store experiences, providers like Afterpay are helping merchants adapt to evolving consumer expectations.
As e-commerce continues to expand, BNPL, contactless payments, and omnichannel shopping experiences will remain key strategies for retailers looking to increase sales and improve customer satisfaction.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group
