The Rapid Growth of Buy-Now-Pay-Later Services
It’s projected that 93.3 million U.S. consumers will take advantage of Buy-Now-Pay-Later (BNPL) services in 2024, with this number expected to rise annually until 2027, albeit at a slower rate due to increasing competition. And although BNPL isn’t as widely used as credit cards (70%), debit cards (60%), or PayPal (43%), a survey conducted by Bizrate Insights for EMARKETER revealed that 14% of U.S. digital shoppers used BNPL to make online purchases in December 2023–a number that simply can’t be ignored.
For even more perspective, In 2020, the BNPL market was valued at $87.2 billion. This increased by about 43% to $125.09 billion in 2021 and reached an estimated $179.5 billion in 2022. By 2030, the BNPL market is projected to grow significantly, reaching $3.27 trillion.
BNPL has gained popularity as a preferred alternative to traditional credit cards, offering consumers a way to avoid the pitfalls of long-term debt accumulation while enjoying the ability to purchase larger ticket goods and even services. The appeal of BNPL lies in its simplicity and flexibility, merging the advantages of credit with short repayment terms and the convenience of app-based shopping. According to a forecast from July 2023, total BNPL spending in the U.S. is expected to grow by 12.3% year-over-year, reaching $80.77 billion in 2024. Providers like Klarna, Afterpay, and PayPal offer attractive terms, such as lower or no interest, encouraging consumers to continue spending due to the ease and convenience of these services, despite the purchase typically coming with a higher price tag.
And the model is resonating with consumers. In July of 2024 alone, Partnerize observed that buy-now-pay-later partners’ percentage of revenue from new customers was 65.18% across client verticals.
In short, these services allow consumers to make purchases and pay for them over time, often without interest or fees if payments are made on schedule. This flexibility can significantly boost consumer purchasing power and reduce cart abandonment rates, leading to higher conversion rates for affiliate partners and the brands they work with. The increased purchasing power means that consumers are more likely to complete their purchases, knowing they can pay in installments rather than a lump sum which can also aid in advertisers experiencing higher average order values (AOV).
This trend presents a lucrative opportunity for programs in the affiliate channel to collaborate with BNPL providers to drive conversions and to also tap into a new market of consumers that may have historically been priced out of larger-ticket purchases. Integrating BNPL solutions into your affiliate strategy can enhance the customer experience and increase your revenue streams.
This is significant news for brands looking to increase conversions inside the affiliate (or any other channel for that matter). So, how does a brand know which BNPL partners are the right fit for them to work with?
Selecting the Right BNPL Partners
When selecting BNPL partners, consider factors such as reputation, user base, and the specific terms they offer. A well-known BNPL provider with a broad user base can drive more traffic and conversions. Additionally, ensure the terms align with your audience’s needs and preferences, as favorable conditions will encourage more customers to opt for these payment plans. For example, Klarna, a leading BNPL provider, is known for its user-friendly interface and flexible payment options, making it a popular choice among consumers.
Seamless Integration and Promotion
BNPL can be accessed via many different avenues by consumers; during a brand’s checkout experience, via the BNPL site, or through dedicated mobile apps. Therefore, it is critical to ensure that your tracking infrastructure is set up to remain persistent regardless of device type. While many affiliate providers boast the ability to reward partners for mobile transactions, their supporting tracking infrastructure is limited to device type (mobile vs. desktop) which produces fragments of the data necessary for executing strategic mobile initiatives. Collaborate with your partnership marketing provider to choose the right mobile app tracking method to meet your needs, for example, an SDK or mobile measurement providers integrations.
Once your program is set up to support mobile app tracking, work closely with your BNPL partners to ensure a smooth setup process, and promote the benefits of BNPL options through your marketing channels to consumers. Highlighting the ease and convenience of these services can attract more customers and enhance their shopping experience. For instance, promoting the availability of BNPL options on your product pages will encourage consumers to proceed with their purchases, knowing they have flexible payment options available.
At-a-Glance: BNPL Partners
As an emerging partner type, many advertisers have yet to find and recruit BNPL partners into their program. Discover, the Partnerize platform’s recruitment and activation engine, makes finding and activating BNPL partners easy by sorting results by Partner Type>Buy Now, Pay Later where you’ll uncover prospective partners such as:
Klarna: Klarna is celebrated for its swift and user-friendly onboarding process, often completed in just a few days. They provide valuable features like a browser extension for easy tracking and plan to introduce lower-cost placement options and CPA increases for enhanced exposure. Klarna Search ensures effective product display, and provides a range of added exposure opportunities such including shoppable videos via their app.
Affirm: Affirm onboards brands quickly, sometimes within 48 hours, as demonstrated with clients on Partnerize. Their accelerated activation and prioritization make them an excellent choice for brands seeking an active and efficient BNPL partnership.
Afterpay: Afterpay excels at quick onboarding and offers initial added exposure at no cost. They are dedicated to helping brands maintain momentum through ongoing engagement and optimization. Integrating Afterpay from the start ensures a smooth and beneficial partnership experience.
Zip (formerly Quadpay): Zip boasts a relatively quick onboarding process. Their ability to to drive sales makes them a valuable partner for brands exploring multiple BNPL options, even without optimization options for CPA increases.
Sezzle: Sezzle offers flexible partnership options tailored to brands’ needs: the Full Affiliate Partnership Launch, with extensive support and segmentation for an additional onboarding fee or set dollar amount in placements, and the Sezzle Anywhere Affiliate Launch, which provides a lower CPA and essential support. Both options empower brands to strategically tailor their BNPL strategies based on their investment and support preferences.
Monitoring and Optimization
Monitoring and optimizing performance is essential to maximizing the benefits of BNPL partnerships. Track key metrics such as conversion rates and average order values to assess the impact of BNPL options on your affiliate campaigns. Use this data to refine your strategies and improve overall performance. Regularly reviewing performance metrics can help you identify areas of improvement and make data-driven decisions to enhance your affiliate marketing efforts.
Optimization Recommendations
Providing a no-to-low interest alternative to credit cards, buy now pay later (BNPL) partners give consumers purchasing power, spreading payments over time and protecting their credit score.
Allocate budget for paid placements: Ensure that you catch the eyes of your target audience on BNPL sites by allocating marketing dollars toward media opportunities–feature opportunities that will alert both new and existing customers to your presence on the BNPL site.
Promote this payment option: If your products carry a larger ticket price, let your audience know that they can purchase these items via BNPL partners. With the ability to stretch larger payments over time interest-free, consumers will have reduced hesitation when it comes to completing their purchase.
Communicate with the partner: BNPL partners take a targeted approach to messaging their consumers, ensuring that the most relevant message reaches prospective buyers for the best possible experience. Communicate your goals and target audience to ensure that you are featured where your customers are most likely to be browsing.
Strategic Implications
Partnering with Buy-Now-Pay-Later providers can offer significant advantages in the affiliate channel. By understanding how these services work, selecting the right partners, integrating them effectively, and continuously optimizing performance, you can enhance your affiliate marketing efforts and drive better results. To learn more about leveraging BNPL partnerships, reach out to us right here.