Afterpay's Economic Impact in Australia
04.06.2024 - 07:51
Mandala's latest research found that Afterpay connected 3.5 million active Australian customers with 129,000 merchants, including thousands of small and media businesses across Australia. Our report shows that in 2023, customers saved $127 million in consumer fees and interest when compared to credit cards, while Afterpay merchants realised $5 billion in net benefits from sales and cost efficiencies.
Afterpay connected 129,000 Australian merchants to 3.5 million active customers, generating $13.4 billion in sales in 2023
Afterpay was founded in Sydney in 2014 and has grown to serve 3.5 million active Australian customers, unlocking interest-free instalment repayments for consumers. Afterpay connects Australia’s most popular brands with next-generation consumers. The service is offered by 129,000 Australian merchants, including thousands of small and medium businesses operating in locations throughout Australia.
More and more customers choose Afterpay because it offers a low-cost, zero-interest finance option, especially compared to traditional credit options. In 2023, Australian merchants generated $13.4 billion in total sales via Afterpay.
Afterpay offers a seamless experience across online and offline shopping that provides consumers with control, flexibility, and transparency over their finances.
Afterpay reached 3.5 million active customers in 2023, who valued it as an alternative low-stress, low-cost form of finance that helps manage spending and connects with an online directory of stores.
Younger consumers – Gen Z and Millennials – have a strong preference for BNPL and are much less likely to own a credit card if they have used BNPL in the past 12 months. More than half (54 per cent) of consumers reported that BNPL reduces the stress of large expenses, with households using BNPL to income smooth or to spread large expenses across multiple paychecks without dipping into their savings.
"Australians who use BNPL are significantly less likely to own credit cards, which represents a notable shift in consumer behaviour. The research indicates BNPL is being favoured by households because it enables large expenses to be spread across multiple pay checks without dipping into savings. This is a different model of household income management to what we have traditionally seen with credit cards." - Amit Singh
Afterpay delivered $138 million in consumer surplus in 2023
Afterpay’s 3.5 million active Australian customers each derived $39 on average in ‘consumer surplus’ benefits in 2023 equating to $138 million in total benefits derived through Afterpay’s spending management capability, ability to smooth out each purchase, and the convenience benefits of accessing the Afterpay online shop directory.
Afterpay’s zero interest model also saved Australians $127 million in consumer fees and interest compared to credit cards in 2023.
Including late fees, Afterpay active customers paid on average 0.6 per cent in costs over their purchase price. This is significantly less relative to credit card purchases, where average costs are nearly 3 times higher at 1.5 per cent.
Afterpay delivered $5 billion in net benefits to 129,000 Australian merchants in 2023
Australian merchants generated $9.6 billion in incremental sales through Afterpay in 2023. Afterpay also delivered increased sales in products and verticals where overall sales across the economy were down.
In addition, Australian merchants enjoyed $711 million in cost efficiencies through Afterpay including:
• Lower cost of servicing online sales;
• Reduced customer acquisition costs through the Afterpay shop directory; and
• A reduction in return rates for products purchased online.
Afterpay contributed $3.9 billion to Australian GDP and supported 39,000 Australian jobs in 2023
Across the economy, Afterpay enabled merchants to generate incremental sales that supported $2.2 billion in direct economic benefits to retailers, and $1.7 billion in indirect economic benefits across the supply chain.
An estimated 27,000 people were employed directly by merchants to support Afterpay sales in 2023. An additional 12,000 jobs were supported indirectly through the supply chain.
A copy of the full Afterpay Economic Impact in Australia report, including case studies and additional information on the research approach and methodology, can be found here.
Read our latest posts
Growing Australia's iron advantage
Our latest report, commissioned by Boundless, presents new research that reveals Australia's ability to competitively supply 20% of global green iron by 2050. This would reduce global steel emissions by 1.7% - surpassing Australia's current total emissions of 1.2% - while adding $103 billion to the economy and supporting 27,500 direct jobs. However, realising this opportunity requires addressing significant challenges including a significant build out of renewable energy generation, storage and transmission and the commercialisation of green iron technologies. Urgent policy support is needed to address these challenges and unlock private investment.
28 Nov, 2024
The Australian Health and Medical Research Workforce Audit
The Australian Health and Medical Research Workforce Audit provides a detailed snapshot of Australia’s health and medical research workforce, highlighting its characteristics, career pathways, and challenges. Drawing on desktop research, surveys, and profile analysis, the report reveals that approximately 39,690 researchers work in the field, with 65% in traditional university and institute roles and 33% in private and clinical settings. Although women make up 52% of the workforce, only 25% hold senior positions, indicating a gender gap in leadership. Over 40% of researchers are from overseas, adding diversity and global connections, while Victoria employs the most researchers, with a notable underrepresentation in regional and remote areas. Despite a shared passion for research and societal impact, many researchers face challenges with funding and job security, and in the past five years, over 60% have moved into non-research roles where they continue to contribute as leaders and managers in related fields. This audit provides valuable insights into the strengths and development opportunities within Australia’s health and medical research workforce.
12 Nov, 2024
Beyond the visa cap: Why restricting international students won't solve Australia's housing crisis
Our latest report in partnership with Student Accommodation Council examines the impact that the Government’s proposed international student visa caps will have on Australia’s metropolitan rental markets. The report demonstrates that while visa caps would significantly harm Australia's economy, they would do little to address housing affordability. International students comprise only 6% of Australia's rental market, with 39% living outside the general rental market entirely. The proposed caps would reduce metropolitan rents by just $5 per week while costing the Australian economy $4.1 billion in GDP and 22,000 jobs. Universities would face $600 million in annual revenue losses. As Australia's fourth-largest export, international education contributes $63 billion to the economy and supports 335,000 jobs. Rather than capping student numbers, the report recommends addressing housing affordability through targeted policies, including reducing tax barriers to foreign investment in student housing and developing purpose-built student accommodation (PBSA) specific legislation. These measures would help maintain Australia's competitive edge while addressing housing pressures through increased PBSA supply.
11 Nov, 2024
Australia’s opportunity in the new AI economy
Our latest research collaboration with Microsoft has just been released, highlighting Australia's most promising opportunities in the new global AI economy. This study identifies key areas where Australia can leverage its strengths in AI applications, AI data centres, and data to drive significant economic growth, create new jobs, and enhance our digital resilience.
7 Nov, 2024