This story has been updated to include a statement from Everlane

Point-of-sale loan startups like Affirm, Afterpay and Klarna are catching on with online customers. Retailers including Peloton, Urban Outfitters and Warby Parker use them as a way to take big upfront prices out of the purchase equation, but there’s still tension around a new model that builds loans into e-commerce checkouts.

When Everlane removed support for Afterpay from its website, the fashion brand received a steady stream of comments from customers on its social media channels protesting the decision. Customers say that Afterpay makes Everlane more accessible to shop.

According to Afterpay, since launching in the U.S. in 2018, the company has added over 2,000 retailers to its platform. The company is publicly traded in Australia and claims that one-fourth of all apparel transactions in that country are completed using its service. (However, there’s no third-party data supporting that claim.) It’s now hoping to find the same kind of success in the U.S.

Everlane said in a statement that it’s re-platforming its checkout, and that Afterpay will be back once that’s been completed. For other retailers, these point-of-sale startups are becoming a useful e-commerce strategy as consumer loans help buffer big purchases, like furniture, and open up a potential demographic that otherwise wouldn’t shop with a certain retailer.

But when loans become available for everything from big-ticket items to a $70 pair of jeans, debt becomes just as accessible. Afterpay and its competitors offer instant financing on e-commerce product pages that is paid off in monthly installments, oftentimes with zero interest or late fees (the exact offering can vary by provider). It is essentially a modern form of layaway, where instead of paying first and receiving the product later customers get immediate satisfaction.

These companies argue that by showing customers upfront exactly how much they will pay on their loans and when, their offering is safer than a credit card — and doesn’t risk sending people into longer-term debt caused when revolving balances snowball with interest charges.

Since point-of-sale lenders aren’t making money from customers, they instead take a cut of each sale driven by their services. Afterpay said in an email that while its rates vary, it typically charges retailers a fixed 30 cent processing fee and a 4-6% commission on the total cart value. Retailers take on no liability for delinquent loans and, according to Afterpay, see increased revenue from larger baskets and fewer instances of customers abandoning their carts before checkout.

This would suggest perverse incentives, with Afterpay essentially making it easier for customers to pull the trigger on a purchase they might otherwise have been hesitant to make out of cost concerns (think impulse buys). Not to mention the common wisdom that discretionary purchases — in the case of Everlane, a pricey Oxford terry shirt or leather sneaker — shouldn’t be made if you don’t have money in the bank to pay for them straight away.

However, a spokesperson for Afterpay said that its product should be thought of more like a “smart budgeting tool” than a debt product.  Max Levchin, CEO of competing loan startup Affirm, has also frequently defended the idea of debt in general, stating that his company offers “smart debt” to groups previously ignored by banks, such as young people and minorities. It’s the credit cards and other existing products with predatory terms that give debt a bad rap, he says. Affirm, like Afterpay, promotes its use of artificial intelligence and machine learning to assess customer eligibility without solely relying on credit scores, which it says enables it to extend reasonable loans to more people. 

Afterpay corroborated what some of Everlane’s customers have said, painting a picture that many of its customers are working professionals who have income, but maybe not quite enough to buy the jeans and shoes they want at the same time. The company enables consumers to buy quality apparel that will last a long time, rather than fast fashion that they’ll quickly throw in the garbage, the company claims.

James Wester, an analyst at IDC, is more critical of these startups. “Some of these things, like eliminating interest, are great,” he said. “But it’s still debt, it’s still the same old business…of making money off borrowed money. If we’re concerned about things like student debt, maybe making it easier to take out more isn’t a great thing.”

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This article has been updated to reflect the correct number of Afterpay customers in the U.S.: Afterpay has added over 2,000 retailers to its platform, not over 3,200.

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