The number of alternative loan app downloads that allow users to pay for purchases over time soared 285% during the Thanksgiving-Cyber Monday period of 2019, compared to the same period in 2018.
The biggest winner in terms of increased downloads during the start of the traditional holiday shopping season was Klarna, the Sweden-based lender in which the American rapper Snoop dogg invested earlier this year.
Klarna Downloads were up over 2,000% compared to Thanksgiving through Cyber Monday 2018. Klarna went from just under 4,000 downloads in 2018 to over 80,000 downloads (combined Apple App download data) US Store and Google Play). One of the key factors in the popularity of these alternative lenders is that Gen Z and millennials are increasingly turning to them for installment loans to purchase lower-cost items such as t-shirts and jeans.
“These alternative lenders are less concerned about credit scores and sometimes have better payment terms than traditional credit cards, which is why they are a good option for some people. The vast majority of US users of these apps are between the ages of 19 and 34. For Klarna, the percentage is 84.5%, for Affirm the percentage is 33.5% and Afterpay is 40%, ”said Adam Blacker, vice president of Global Insights and Alliances at Apptopia in an emailed statement.
Additionally, these installment lenders target younger consumers through social media.
Blacker noted that both Klarna and Afterpay advertise on the Facebook Audience Network. Ads are displayed in both games and other non-shopping apps, so they clearly attract users outside of traditional merchant websites and stores.
Another interesting point regarding these applications is that both the traditional installment loan and the deferred debit / credit options are becoming very popular. Klarna and Say Both offer installment loans that are typically repaid in 6 to 12 months in equal installments with the consumer paying interest to borrow.
Deferred payment players like Subsequent payment Y Quadpay Provide a deferred or late payment option in which the purchase is generally divided into four equal installments and charged to a payment card every two weeks. In deferred payments, the merchant pays the fees. There are many variations on the deferred payment option.