By Jessica Duncan
We first wrote about Buy Now Pay Later (BNPL) financing companies catapulting into the limelight in the fall of 2020. Six months later there is no sign of their presence in the payment space slowing down. In fact, these companies are aggressively working to expand their reach by broadening their solutions and becoming more widely available at the point of sale, both online and in-store and so far consumers are taking notice.
Consumer Sentiment of Buy Now Pay Later is Favorable
In a recent survey conducted by Competiscan:
- 51% of consumers that reported having made a purchase with a BNPL company were very satisfied with their experience.
- 71% chose the payment option out of convenience.
- 63% were very likely to use BNPL for future transactions.
BNPL Firms Promote Engagement with their App and the Referral of Friends
While consumer adoption of BNPL is still growing, the generally positive sentiment towards this payment option has BNPL
competitors focused on building deeper customer loyalty and engagement through email marketing. Afterpay reached out to a customer after they paid their installment plan in full to encourage the customer to continue to shop their partner brands and to leave a review on their app.
BNPL companies are also using a common acquisition tactic to help spread brand awareness by leaning on their customer base to expand to new users. Afterpay and Klarna were recently seen targeting customers with cash bonus offers of up to $20 per referral. Klarna has dedicated marketing efforts to promote the ease and convenience of their mobile app, referring to it as an all-in-one experience and bringing attention to the ability to use the Klarna app to “Pay in 4 anywhere.” Klarna’s app allows users to create onetime Visa account numbers to be used to complete the purchase directly through their app.
As we have seen through marketing efforts and expansion of services, BNPL companies are capitalizing on their early success and moving to further penetrate into the payment space. We expect we will continue to see them push to capture new audiences and deepen their relationships with existing users.
What Does This Mean for Credit Cards?
35% of the survey respondents reported having used BNPL at least once in the past year, compared to 93% of the respondents stating they have used a credit card in the past year, of which 67% reported using credit cards 20 or more times.
Despite credit cards holding a dominant place as a preferred method of payment among consumers, the sudden momentum that BNPL has gained is enough to make financial institutions develop strategies and position their products and services against these alternative point of sale options.
How Other Payment Providers are Responding?
The entrance of BNPL has brought new competition to payment providers but it also has created an opportunity to focus on the audiences that they may not currently be reaching with their traditional products. Chase has been seen giving more promotional attention to My Chase Plan, and similarly Citi has promoted its Citi Flex Pay. Both services allow cardholders the ability to break down large purchases into fixed monthly installment plans.
American Express used language to directly position itself as an alternative to Buy Now Pay Later. In the recent email shown,
American Express used the headline of “Buy Now, Pay Later with Plan it” and also went on to differentiate themselves by calling out
- Plan it is built into your Card–and ready to use today
- No extra login or app needed
- No new line of credit
- Earn American Express Rewards
- Use anywhere you use your card
- No additional payment to keep track of
The Buzz Words of NOW and LATER Expand Beyond Payments
Competiscan saw a 78% increase in the use of “Now” and “Later” in lead messaging during January 2021.
The Buy Now Pay Later movement has influenced more than just financial services, and the appeal of the “now” and “later” phrase has caught on in marketing references across a variety of industries. Of course, the pandemic has also contributed to this phenomenon as many companies are encouraging customers or prospects to take action now with the intent of being able to utilize the service or product later. The current landscape has lent itself for this approach to resonate with consumers as many are looking ahead but also staying mindful of their financial choices.
It’s evident that Buy Now Pay Later has presented a new alternative for consumers looking to avoid the application of credit or simply for the convenience factor that has come with increased online shopping. It is also apparent that Buy Now Pay Later is having an impact on consumer marketing and possibly a turning point for how the next generation of consumers will choose to make purchases and manage their finances.
For more information on marketing trends, Competiscan clients can view our archive of reports and insights online.
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