Buy Now, Pay Later: Emerging Trend With Loyalty Twist

With inflation skyrocketing to 40-year highs, everything is costing consumers more and causing them to reevaluate budgets. Coupled with the financial impacts of the pandemic, it’s no wonder why buy now, pay later (BNPL) -- a purchasing option that offers short-term financing to make purchases and pay for them at a future date, often interest-free -- is trending with consumers and gaining traction with major brands, retailers and credit card issuers.

According to a PYMNTS study, BNPL saw an 80% increase in its rate of use between 2020 and 2021, with C+R Research reporting the average BNPL price point at $689. With this shift, BNPL opens an opportunity for brands to capture growth in the loyalty space. Our recent research shows that today’s consumers value brands that provide convenient, seamless experiences to meet their emotional as well as rational needs. BNPL can provide that, plus more.

By reducing or eliminating barriers to large purchases, BNPL provides a strong opportunity to introduce new customers to a brand. The BNPL model allows for an immediate transaction where there otherwise might be hesitation, opening the door for new buyers, and strengthening relationships with existing customers.



BNPL leaders have entered the loyalty landscape with their own programs, as well as retail partnerships that extend loyalty even further. Afterpay’s loyalty program, Pulse Rewards, offers various benefits, including welcome rewards and early access to sales from favorite brands. The more points customers accumulate, the more exclusive rewards they can earn.

Klarna Rewards Club focuses on rewarding on-time payments rather than purchases. Points are “earned” for each purchase, but the rewards are added to the shopper’s balance when payments are made. Points can be redeemed with partners like Amazon, Walmart and Starbucks. Members also receive exclusive deals, content and experiences.

Retailers partnering with these providers and offering their own rewards programs have an opportunity to allow customers to “double up” on reward earnings. Shoppers who are loyalty members with a retailer and the BNPL provider can earn rewards in both programs with one purchase. For example, a member of Nordstrom’s loyalty program who chooses Afterpay at checkout and enrolls in Pulse Rewards earns points for both loyalty programs with a single purchase.

While BNPL is still an emerging trend, with rapid growth, partnership opportunities and a robust mix of benefits for consumers, it’s likely here to stay. Now is the time to consider how BNPL may influence your brand’s customer experience, especially how it may energize your loyalty offerings. Here are several tips to leverage BNPL in your loyalty strategy:

  1. Meet your customers where they are by offering flexible payment options while keeping earnings and benefits the same.
  2. Incentivize large purchases by offering cash back or elevated rewards for mid-tier customers that can be used during high purchase seasons such as fall and winter.
  3. Forge partnerships with brands that appeal to your audience, allowing them to cross-earn in areas that are most meaningful to them.
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