Afterpay co-founder Nick Molnar says Gen Z and Millennial shoppers are close to accounting for half of all retail spending by the end of this decade, predicting their aversion to credit cards will drive the debt spending more broadly throughout the economy.
Molnar, an executive at Afterpay owner Block, added that the cost-of-living crisis had spurred greater demand for buy-now-pay-later (BNPL) products from younger consumers, comparing the growth to the rise that the company experienced during COVID-19. pandemic
Nick Molnar, co-founder of Afterpay.Credit: Dominic Lorrimer
Founded in 2014, Afterpay is the largest BNPL operator in the country. It offers digitally approved interest-free loans, which borrowers repay in four installments. The company, which has 3.5 million Australian users and counts Millennials and Gen Z as its main customers, is a key competitor for the banks' credit card business.
As the government prepares to regulate the fast-growing BNPL sector, Molnar on Tuesday was upbeat about its long-term prospects as a competitor to traditional bank loans, pointing to younger generations' preference for debit cards over credit cards
“At the highest level, millennial and Gen Z consumers accounted for 30% of all retail spending in the Australian economy in 2020. By 2030, this consumer will account for 50% of all retail spending,” he to say.
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“This consumer still deeply prefers a debit card to a credit card. More than 90 percent of our consumers use a debit card, not a credit card. And so you see that debit card economy continues to become more pervasive and prevalent, and our Afterpay consumers are looking to Afterpay to manage the most of their spending,” said Molnar.
Afterpay says 44% of its customers are Millennials (born between 1981 and 1996) and 28% are Generation Z (born between 1996 and 2010). Since its launch, it has expanded from its roots in the fashion industry to other sectors including travel, food, toys, electronics and healthcare, and this year increased its maximum credit limit to 4,000 dollars for customers who meet certain criteria.
The federal government has said it will regulate BNPL's products, including Afterpay, this year, and Molnar said the regime should recognize that Afterpay was very different from credit cards, which rely on charging interest to customers.
