14th September, 2020
Facilitators of “buy now pay later” (BNPL) are expanding across the globe. They are not only encouraging consumers to pay via debit cards, but they are also starting to reward them via loyalty initiatives.
A specialist in this arena, Afterpay, has shared that its growth momentum continued in all markets with FY20 global underlying sales increasing 112% to $11.1b (year ended June 30). Active customers more than doubled to 9.9m. An average of 20.5k new customers were added to the platform per day during the last quarter, exemplifying growth during the pandemic. The company went live in Canada, and also chose to acquire Pagantis (will offer Pagantis' BNPL products under its European brand, Clearpay). It is also available in Australia, New Zealand, the U. S., the U. K. etc.
Afterpay’s model - it charges retailers to offer customers interest-free installment plans by splitting a purchase amount over four manageable fortnightly installments, available both online and in-store or via the iOS or Android app. By enabling customers to enjoy the benefits of splitting any purchase into these four, manageable installments with zero interest, the increased ability to plan and budget cash flow accordingly has resonated strongly with the Afterpay customer community. Customers can not revolve in debt, with no exceptions, and neither are they able to make further purchases if an installment is overdue. “These simple and transparent rules make Afterpay different,” shared a spokesperson. Customers can select Afterpay at checkout online or through the apps of its merchant partners. Afterpay currently has 55k+ merchants and almost 10 million customers globally.
Afterpay has announced a couple of travel-related initiatives in Australia in the recent months. It launched a partnership, allowing Qantas Frequent Flyers to earn Qantas Points with the BNPL platform. In April this year, Afterpay and LayAway Travel collaborated to create a new travel service, PLAY - a platform that helps Aussie travellers’ pick, book and pay for their holiday over a series of installments prior to their departure date.
Travel brands like Qantas acknowledge that financial services is one of the most popular ways to earn points in the program.
Afterpay has had Jetstar on its platform for three years now offering customers the ability to pay for their holidays in four fortnightly installments. “We also launched with Agoda and Webjet earlier this year, in addition to our partnership with PLAY,” the spokesperson told Ai. “We are always guided by our customers as to where they want to see Afterpay made available and there is definitely appetite in the travel space, particularly prior to the Covid-19 pandemic.” The company asserted that by offering customers a BNPL solution, travel and airline brands are able to offer choice to customers that are looking for a transparent, flexible and easy solution to pay for their travel that doesn’t incur interest and allows customers to budget responsibility, which is particularly important during this time.
The team at Afterpay also works on customized flexible payment offering for a travel e-commerce platform. For instance, in case of PLAY, customers can design a holiday and payment cycle that suits their budget. “They can select to pay with weekly or fortnightly installments which are automatic and always interest free. The holiday is then paid off by the time they depart, meaning they avoid coming back from their holiday with a debt-lag,” said the spokesperson.
Explore payment-related trends at the upcoming Airline Travel Payment Summit - ATPS Virtual Conference 2020
Date: 20 - 22 Oct 2020