How ‘Contact Us’ And The Kardashians Ignited Afterpay In The US

Never underestimate the value of the “Contact Us” form that every merchant and service provider places somewhere on its website — because no one knows who is going to end up on the other side of it.

In the case of Afterpay, the buy now pay later (BNPL) payment services platform, it turned out to be the Kardashian media empire that came to call via the form. The famous family was looking to integrate the Australia-based startup’s point-of-sale (POS) installment financing solution into their vast array of digital businesses.

“As it turned out, they filled out our content form. Sometimes, the world has an amazing way of building relationships,” Afterpay Co-founder and U.S. CEO Nick Molnar told Karen Webster during the latest conversation of the PYMNTS Founder Series. “In this case, it provided a really great opportunity to work closely with their whole team, and to learn about the impact of influence-based businesses on retail.”

An endorsement from the Kardashian media empire is a big deal for any up-and-coming brand. Kim Kardashian-West alone has more than 60 million followers on Twitter, more than 160 million followers on Instagram and a net worth of roughly $350 million derived from selling and endorsing a wide assortment of products via those channels. Since Kardashian followers don’t just passively observe, but actively spend, an endorsement from a member of the “K Klan” can be a major boost for anyone in the business of reaching consumers.

However, for a brand like Afterpay, which launched in the U.S. just 18 months ago, it was an incredibly fortuitous boon during its early days in the market — not to mention, a powerful lesson on the importance of staying on top of basic tasks, like minding the “Contact Us” form. In addition, Molnar noted, it was amazing, if a bit surreal, to get an Instagram post from Kim Kardashian that instantly reached five times the population of Australia.

The company had come a long way from its launch in 2014, when it had about 10 retailers signed on to offer Afterpay as a payment option during checkout. The big idea was that millennial consumers were looking for payment flexibility without getting tied into revolving credit agreements — a change Afterpay saw coming when it was founded, though it was not quite evident to the entire market yet.

“Millennials were still a pretty small percentage of retail spend in 2015,” Molnar said.

Molnar founded Afterpay for that rising generation of consumers, offering a more flexible and transparent financing option via retailers. As it turns out, the firm’s early bet has paid off. Afterpay has spread from its native Australia to a global base of more than 6 million consumers on three continents, offering services through more than 40,000 retail partnerships, including the Kardashians.

The focus now, Molnar told Webster, is where to go — and grow — next.

Seeing The Early Shift

Molnar’s journey to financial services has been a bit circuitous. He got his start selling jewelry from his college dorm room on eBay. His family had a long history in the jewelry trade, and he was able to grow his dorm-room business into Australia’s largest seller of jewelry and watches.

While Molnar confessed that he had no special passion for jewelry beyond his family connection, selling it at a high level gave him insight into the subtle changes in millennial consumer behavior. As the first generation to come of age during the financial crisis, he noted, they seemed to have learned that spending money they don’t have is something to be avoided.

“When you look at the spending graphs for millennials at that time, debit was growing at twice the speed of credit, but the average order value was much lower, which correlates with the lower disposable income in the demographic at the time,” Molnar said. “This was a generation that was spending differently, wanted to spend their own funds and needed a solution with more flexibility, without all the extra charges that come with a revolving line of credit.”

The change didn’t ring any data bells, he noted, because that spending share was so low at the time — but the writing on the wall seemed clear in terms of what Afterpay needed to build for that emerging consumer.

The firm has not fundamentally altered the product since its 2014 launch, Molnar pointed out. Customers can elect to divide their payments into four equal parts, to be paid in installments spaced over four weeks.

There are no financing charges or interest payments, and loan terms cannot be extended. Unlike a typical revolving credit product, where it is in the underwriter’s interest to have the consumer pay late or kick the can down the road in terms of making minimum payments, Afterpay doesn’t make any money on the consumer side of its platform unless they are late. Afterpay charges its retail partners a percentage of the transaction, so the incentives are centered around customer success, not profiting on failure.

“It was a long game, and we didn’t see the results in 2014 that we see today,” Molnar said.

However, in the early days, he noted, the company had two advantages. The first was the jewelry platform that Molnar founded before Afterpay, as it offered a popular channel with a built-in base of consumers. He had his anchor client secured, which could attract lots of millennials who wanted to buy jewelry. The second came through a popular Australian clothing retailer called Princess Polly, which signed on with the service.

“Within 24 hours of launching, we were doing 15 percent to 20 percent of their transaction volume,” Molnar said. “It blew our minds. We knew we were truly onto something.”

The Next Frontier

Today, said Molnar, Afterpay is the second-largest referral source for retailers in Australia. The number-one spot will likely be hard to nab, as it is presently held by Google. Yet, success in one market is not a guarantee of success in another — meaning that Molnar’s decision to “uproot my whole family” so he could bring Afterpay to U.S. shores still ranks among his scarier life choices.

“There is an assumption that the U.S., U.K. and Australia are all very similar markets,” Molnar told Webster, conceding that there are, in fact, many commonalities. However, “they are very distinct in terms of consumer preferences.”

The financing product took to the American market to the extent that Afterpay has signed on 3 million users in 18 months, said Molnar — a much better result than expected. That endorsement from Kim Kardashian, which sprang up organically, certainly helped. He noted that the Kardashians sought Afterpay out through an online sign-up — not because it was able to directly market to them, but because customers were.

“We rely on our customers to be our best salespeople. They will independently head to sites and suggest to merchants directly that they need to add Afterpay, and we think that’s really the most powerful endorsement we can get,” said Molnar.

The company’s goal for 2020 is to keep growing into new markets, largely driven by the merchants with which the firm already works that want to offer Afterpay to their consumers.

“Millennials are growing up all over the world,” said Molnar. “And what they have in common is a desire for payments flexibility — a controllable payments system that is built to work with them, instead of profiting by working against them.”