With full COVID vaccination rates reaching the 63 per cent mark in August, Canadians have a lot to feel good about. But what Pfizer, Moderna and AstraZeneca have afforded us in antibodies we still sorely lack in dopamine. For that, there’s online-shopping enablement courtesy of retail-credit loans from Afterpay, Splitit and Sezzle.
Point-of-sale financing options are by no means a new concept. The first iteration of layaway was conceived during the Great Depression of the 1930s, a similarly awful and unprecedented collective experience. The new kids of retail credit, however, spin the format in ways that uniquely cater to a population that’s bored as hell and homebound. In pre-pandemic days, the buys were bigger and received later. In the case of Afterpay and co., the applicable purchases are priced lower—more tie-dye sweatsuit than fridge—and delivered upon payment of the first installment (usually a quarter of the total). An example: the cost of Clinique’s popular Dramatically Different Moisturizing Lotion, which sells for $39 at Sephora, is broken into $9.75 increments.
While the fine print differs by provider, these options, now available at the checkouts of big-name retailers like Aritzia, Sephora and Wayfair, all offer the acceptance of credit or debit payments, immediate shipping and the relative absence of fees and credit checks (except in rare cases). Consequence arrives not as a terrifying collection agency, but in being locked out of your account until the original charge is settled up and prevented from making further purchases—which, as Afterpay’s internal metrics show, you likely will.
The quick-hit nature of retail credit lends itself to the treat-yourself moment we’re in: a recent Statistics Canada report clocked a seismic shift in consumer behaviour, with online purchases surging by 99.3 per cent between February and May of 2020—our halcyon sourdough days—and e-commerce sales hitting a record $3.9 billion. If we had to shelter in place, glued to Zoom, why wouldn’t we shop online? Better still, if we couldn’t control a global, debilitating, airborne virus—or, lately, forest fires and myopic billionaires—why wouldn’t we modulate our moods by paying $37 upfront to make our legs smell like sandalwood?
The financial dissociation of point-of-sale splurges isn’t just inevitable, says Jackie Porter, a Mississauga-based certified financial planner—it’s the point. “The escape factor is very much there, especially now that shopping has become an activity, like a nice thing to do,” she says. “A lot of people are struggling with mental health during the pandemic, and the instant gratification is just an easy way to self-soothe; it doesn’t seem to cause any financial harm in the moment.”
Porter notes that with low installments, consumers aren’t primed to stress about how future payments will eventually add up. “There are a few things wrong with that, because it’s like, well, how many more times are you actually doing this?” she cautions. “If you plan ahead to purchase a treat, like clothing or an electronic item, that’s actually in your budget. With retail credit, you might not add it up or factor it into all your other bills—especially if an expense comes out of nowhere in the future and you’ve [already committed] to paying installments for non-essentials.”
Afterpay, with 11 million customers globally, provides an attractive alternative to the revolving trap of typical credit cards and is, consequently, flocked to by millennial and Gen Z cohorts, who tend to skew more debt-averse. A perfect storm of adoption by younger demographics and the long, long tail of psychological fallout brought on by COVID’s necessary isolation signal that the economic anesthetic of installment-based splurges is here to stay. “We think, ‘Maybe this will make us feel better,’ ” says Porter, “even if it’s only for a short time.”
This article appears in print in the October 2021 issue of Maclean’s magazine with the headline, “Moisturize now, pay later.” Subscribe to the monthly print magazine here.