Installment payment app downloads surge for 2019 holiday shopping

The number of downloads for alternative lending apps that allow users to pay for purchases over time skyrocketed by 285% during the Thanksgiving through Cyber Monday period for 2019, compared to the same period in 2018.

The biggest winner in terms of increased downloads over the start of the traditional holiday shopping season was Klarna, the Sweden-based lender in which U.S. rapper Snoop Dogg invested in earlier this year.

Klarna downloads boomed over 2,000% when compared to the 2018 Thanksgiving through Cyber Monday period. Klarna went from just under 4,000 downloads in 2018 to over 80,000 downloads (combined U.S. Apple App Store and Google Play app download data). One of the key drivers for the popularity of these alternative lenders is that Gen Z and millennials are increasingly turning to them to obtain installment loans to buy lower-cost items such as t-shirts and jeans.

“These alternative lenders care less about credit score and sometimes have better repayment terms than traditional credit cards so they are a good option for some people. The vast majority of U.S. users for these apps are aged 19-34. For Klarna, the percentage is 84.5%, for Affirm the percentage is 33.5% and Afterpay is 40%,” said Adam Blacker, VP Insights and Global Alliances at Apptopia in an emailed statement.

Additionally, these installment lenders are targeting younger consumers through social media.

Blacker noted that both Klarna and Afterpay are advertising on the Facebook Audience Network. The ads are being shown in both games and other non-shopping apps so they are clearly attracting users outside of the traditional merchant websites and stores.

Another interesting point regarding these apps is that both the traditional installment loan and deferred debit/credit options are seeing strong popularity. Klarna and Affirm both provide installment loans that are typically repaid over 6 to 12 months in equal installments where the consumer pays interest to borrow.

Deferred payment players such as Afterpay and Quadpay provide a deferred or delayed payments option where the purchase is generally split 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.