Afterpay’s efforts to embed itself in the U.S. retail ecosystem are showing results. 

The point-of-sale lender announced this week it has more U.S. customers than customers in New Zealand and in Australia, where it is headquartered. This is the first time since the company’s 2014 launch that its U.S. customer numbers have outperformed other markets. 

“Our global expansion is accelerating with the U.S. and U.K., growing at considerably faster rate than what we experienced in ANZ,” Anthony Eisen, co-founder and CEO of Afterpay, said in a statement. He added that the U.S. makes up 30% of the company’s underlying sales. 

Afterpay, founded in Australia and launched in the U.S. in 2018, has spent much of the past two years trying to grow its stateside customer base. According to the company, it now has 3.6 million U.S. customers, compared to 3.1 million customers in Australia and New Zealand, and 600,000 in the U.K. Afterpay faces competition from U.S. banks and startups, but its approach to partnering with brands is allowing it to hold its own. 

See also: Affirm rolls out virtual card for checkout loans 

Afterpay has pitched U.S. merchants on its ability to increase conversion rates and basket sizes due to its interest-free installment loans, which offer customers an option to buy now and pay later. Customers pay for purchases in four biweekly installments, without paying anything up front. According to the company, it doesn’t charge interest on the loans, but does charge an $8 late fee for missed payments, capping late fees at 25% of the purchase total. In addition to late fees, the company makes money by charging merchants 4% to 6% of the transaction. 

Since launching in the U.S., Afterpay has partnered with major brands like Levi’s, O’Neill and Ray-Ban. The company now has more than 100 employees working at its U.S. headquarters in San Francisco. This year the company announced a new chief financial officer, chief product officer and chief marketing officer, all based in San Francisco. Afterpay said it added 1 million new U.S. customers in November and December 2019 alone. During the second half of last year, the company processed $916 million in sales in the U.S. 

While Afterpay continues to grow its U.S. market reach, other point-of-sale lenders — like Affirm, Klarna, Bread and banks — are vying for a piece of the lucrative point-of-sale loan pie. Affirm, also based in San Francisco, has 4.5 million customers, according to the company, and recently launched an option for consumers to use its platform outside its network of retailers. 

Alyson Clarke, principal analyst at Forrester Research, previously told Bank Innovation that the model might struggle in a recession, saying that if point-of-sale lenders “have brands that sell things that consumers consider more necessary than discretionary, that’s going to impact the survivability.” 

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