Build loyalty with transparent BNPL payments
The disruption of the traditional credit market by BNPL (Buy Now, Pay Later) comes as no surprise, as this digital payment method allows consumers to split large purchases into installments without interest or fees – offering both access to credit for those who might otherwise be denied and convenience for those who already enjoy using credit cards. Growing competition within BNPL could fuel another trend: credit cards could lose premium preference to BNPL legacy payment systems, potentially diluting cardholder loyalty. This is at a time when consumer loyalty to credit cards based on rewards programs is well documented.
In this edition of Buy now, pay later Tracker®PYMNTS explores the impact of BNPL offers on consumer payment preferences, trust and loyalty.
Around the BNPL Payments Area
BNPL compound about 2% of all global payments by the end of 2021, but its sales volume is on track to double, topping $181 billion this year. As adoption surges, with vendors such as Klarna, Affirm and Afterpay seeing year-over-year growth ranging from 46% to 104%, retailers have climbed on board, and it’s no wonder : a recent report noted that nearly half of consumers spend more when using BNPL than they would when using credit cards. Growing competition in the space is prompting BNPL vendors to also offer loyalty programs, but loyalty to BNPL appears to be fragmented at best. Consumers are driven by opportunity – the best deal, the best shipping option, the availability of what they want. Most of BNPL’s sales are associated with transient consumers.
BNPL’s momentum is on the rise, especially for higher-priced purchases, such as travel. Canada’s largest airline, Air Canada, has announced a collaboration with Visa to make BNPL Installment Payments available to eligible Visa cardholders. The association makes Air Canada one of the first airlines to participate in the Visa remittance solution and appears to be the latest example of a growing trend with BNPL showing up at more physical outlets. By providing greater payment flexibility, the offer will allow more Canadians to travel, both at home and abroad.
To learn more about these and other stories, visit Tracker news and trends.
Rare Carat on loyalty thanks to BNPL and transparent payment options
For many consumers, the decision to buy expensive jewelry is as much about affordability as sentiment. A lack of transparency about what they will pay and the idea of accruing interest can be a barrier to making that purchase. That’s why offering consumers payment options that allow them to avoid interest while making installment payments can be the win-win solution merchants and shoppers are looking for.
In this month’s feature, Apeksha Kothari, Chief Operating Officer of rare caratsexplains how BNPL’s transparent payment options help retain customers who not only return, but pay them back through word of mouth.
PYMNTS Intelligence: is consumer loyalty stronger towards merchants or the BNPL?
The rapid rise of BNPL is changing merchants’ perspectives on its impact on consumer loyalty. It is generally more expensive to attract new customers than to retain existing customers. Likewise, existing customers tend to spend more and buy more often. Yet consumers are driven by opportunity.
This month’s PYMNTS Intelligence explores how credit cards with rewards that also include BNPL payout features can build merchant loyalty and potentially increase card usage.
The Buy Now Pay Later Tracker®produced in collaboration with Separate itexamines how consumers can use buy now, pay later to build consumer loyalty and how the integration of BNPL payouts into credit cards provides a unique opportunity for issuers and merchants to build stronger relationships with consumers.
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