With an estimated 29 million U.S. consumers having used buy now, pay later (BNPL) to complete their purchases in the last 12 months, merchants and brands are increasingly looking at the payments option as a way to connect with consumers in a manner they couldn’t do before.
Zahir Khoja, general manager of North America for Afterpay, said the company’s shop directory generates an average of one million referrals per day for merchants, “and you can imagine the impact that has in terms of conversion and average order value.”
A PYMNTS and Afterpay study found that more than half of consumers have now used BNPL services at least once, with the largest surges in utilization occurring among 18- to 24-year-olds and those 55 and older, at 62% and 98%, respectively. The data also shows that 26% of millennials paid for their most recent online purchase with BNPL, and 15% did so in stores.
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Last month — just weeks after the announcement of a $29 billion acquisition by Square — Afterpay launched a new advertising solution to allow brands to place featured ads across the BNPL provider’s app. The new feature aims to help retailers reach Gen Z and millennial buyers, among whom BNPL is most popular.
“These brands now have an even greater opportunity to promote their products and offers to our customers,” Khoja said. “So it’s a great opportunity for the brands to leverage and add customers to their loyal base.”
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Since the launch last month, Khoja said brands that promote their products through the Afterpay ads platform are seeing a 20% boost in sales, which he predicted will only continue to grow as the holiday shopping season begins.
Data in the Driver’s Seat
Afterpay also recently launched a new analytics platform called Afterpay iQ, which provides an artificial intelligence (AI)-powered breakdown of various operations, such as marketing performance, omnichannel volumes and payment conversions.
Khoja said Afterpay iQ is a self-serve platform, giving retailers information in an easy-to-understand format, and it will provide recommended actions for merchants looking to optimize their operations.
Also see: BNPL Firm Afterpay Launches Data Platform for Merchants
“The intent was to put the data and the insights into the hands of the merchant, so they understand how Afterpay is helping them drive value for their business and they can take the appropriate actions to optimize their business as well,” Khoja said.
For example, a retailer may be able to compare how certain regions are performing at different times, and launch marketing campaigns in order to target different consumers.
“In today’s world, where retail competition is fierce for that consumer, this enables them to maximize the experience and instantly understand the channels – and the spending within those channels – so they can make the right decisions,” Khoja explained.
A Seamless Experience
As consumers move from eCommerce to in-store, Khoja said it’s also important that merchants consider aligning their payment offerings across all channels. “From a consumer perspective, they want to have that interaction, but they also want to have the flexibility and the opportunity to pay in a way that makes sense for them, and buy now, pay later is part of that equation,” he noted.
Afterpay has tried to make it as easy as possible for retailers to offer BNPL in-store, Kohja told PYMNTS, by utilizing contactless payment solutions and the Afterpay card that’s stored in consumers’ digital wallets. This way, there’s no additional integration or costs for the retailer to extend their online offering to in-person.
“It’s enabling that consumer experience to extend into the store across multiple different channels, and … it allows them to continue to have the opportunity to spend in a responsible way, something that’s becoming extremely important for the younger generation of shoppers,” Khoja said.