Afterpay (ASX:APT) - CEO, Anthony Eisen
CEO, Anthony Eisen
Source: Wiki Project
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  • Shares in Afterpay (APT) are up this morning following an after-market announcement on Wednesday
  • The buy now pay later (BNPL) provider says it will offer its service to major US retailers such as Amazon and Nike
  • Afterpay had previously limited customers to its partner merchants, but says it will charge “affiliate revenue” from the new retailers
  • Online sales in the US soared 43.7 per cent in 2020 and grew an additional 31 per cent in the first quarter of this year
  • Afterpay is up 7.43 per cent to $130.33 per share at 11:43 am AEST

Shares in Afterpay (APT) have enjoyed an early morning boost after the buy now pay later provider said it would expand its service to major US retailers.

According to the announcement, released late on Wednesday, Afterpay can now be used at Amazon, CVS, Dell, Kroger, Macy’s, Nike, Sephora, Target, Victoria’s Secret, Walgreens and Yeti, which collectively represent almost half of all e-commerce sales in the US.

The move marks a distinct shift for Australia’s fintech darling, which until now had limited customers to its partner merchants.

Afterpay currently generates most of its revenue by charging a fee — usually between four and six per cent — from these partners, but analysts have said those rates are likely to fall as competition in the booming buy now pay later (BNPL) sector rises.

Instead, the company said it would receive “affiliate revenue” for the new retailers, but did not elaborate on the actual numbers.

“Available only through the Afterpay app, select customers can shop at merchants by simply choosing their favourite brand in the Afterpay Shop Directory and paying with Afterpay,” the announcement said.

“Customers enjoy all the same benefits of using Afterpay, including the ability to pay over time without having to pay interest or finance charges.”

E-commerce growth in the US almost tripled in the fist three months of 2021, with more consumers trading in-store purchases for the convenience of online spending.

Based on data from market researcher Digital Commerce 360, online sales in America soared 43.7 per cent last year and grew an additional 31 per cent in the first quarter of 2021.

“Over the past year, we all relied on online shopping for the things we needed during the pandemic,” General Manager of Afterpay North America Zahir Khoja said.

“But, as we celebrate the physical re-opening of stores, consumers still want the convenience and flexibility of buying with the click of a mouse as part of their ‘new normal’.”

The size of the US market means it’s the sector’s biggest prize, with many BNPL firms investing heavily in marketing and partnerships as larger, more traditional financial giants, such as PayPal, look to enter the fray.

In Australia, where the adoption of BNPL is high but growth rates have started to slow, the upcoming entry of Commonwealth Bank’s own service — promising lower fees to retailers — has led to Afterpay preparing to diversify by offering branded savings accounts.

The company has said it is also contemplating a US listing in an effort to maintain its dominant position.

Shares in Afterpay were up 7.43 per cent to $130.33 at 11:43 am AEST.

APT by the numbers
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