Gyms are embracing payment platform Afterpay and with good reason. Loved by convenience-obsessed millennials, it allows customers to split payments into smaller chunks that can be spread out over a number of weeks.
Studies also show that customers spend more in one go, as well as over time, when a buy-now-pay-later platform is engaged. The sector is also expected to get even bigger in coming years as more consumers opt to use them.
Here’s what it could mean for your fitness business:
What is Afterpay?
Afterpay is a payment platform that allows consumers to set up and manage their own payment plans for purchases without needing to apply for credit. Essentially Afterpay loans the business the payment amount for a small fee and the customer pays Afterpay back.
Created by two wealthy neighbours in the leafy Sydney suburb of Rose Bay, Anthony Eisen and Nicholas Molnar, it was first listed on the Australian stock exchange in 2016.
Buy-now-pay-later platforms like Afterpay have been credited with helping to changing the face of online shopping due to their ability to overcome the point-of-sale price hurdle many consumers struggled to overcome.
The pandemic lockdowns gave it a further boost in popularity as people shopped from their armchairs in record numbers.
Should fitness businesses add Afterpay as a payment option?
Buy-now-pay-later platforms should be considered as part of an overarching marketing plan that has the business’ key demographic in mind.
Therefore, if your business’ main customer groups are part of the gen z and millennial cohort then you’ll most likely be aware that providing convenience and flexibility wherever possible is crucial, which includes everything from your opening hours, websites and online platforms as well as payment options.
Snap Fitness, Australia's second-most popular 24hr gym, formed a successful partnership with Afterpay in the post-pandemic environment, allowing new customers to pay off sign-up fees over time, causing some in the industry to take note.
However, every business is different and each owner will have their own individual circumstances so it’s important to weigh up both sides when considering whether to engage this payment platform.
Pros of Afterpay for small business
- Increased conversion: Payments such as sign-up fees or multi-class packs, that might otherwise be too high to be absorbed in one pay cycle, can be spread out across a number of weeks. Afterpay’s website claims that customers using their payment platform spend 18% more on average.
- Afterpay enables convenience and flexibility for customers, which is increasingly important for consumers in the millennial and gen z cohorts.
- Afterpay takes care of the finance - businesses receive the payment in full within a few days.
- Access to Afterpay’s customer base and online events such as Black Friday.
Cons of Afterpay for small business
- Afterpay generally takes 4-6% of every payment, depending on your agreement. While this sounds small, depending on your profit margins and the percentage of sales via Afterpay, it could add up.
- Financial regulators have warned that consumers need to be wary of over-stretching themselves on these easy-to-access payment platforms.
- Customers who do not keep up with their payment plans can face late fees and refused credit.