Affirm and Afterpay Adapt Loyalty Programs in Response to Changing BNPL Landscape

In a bid to enhance long-term customer engagement, Affirm and Afterpay, prominent players in the buy now, pay later (BNPL) sector, are recalibrating their loyalty strategies, as outlined in PYMNTS

Affirm, on February 5, discontinued its rewards program, which previously granted points for BNPL purchases redeemable for discounts on loans at select merchants. Despite the termination, existing program participants can utilize their accrued points until April 5. An Affirm spokesperson commented, «We’re constantly testing new features and looking for ways to improve Affirm’s products. While Affirm’s Rewards beta program will no longer be available, we are continuing to explore how we can bring a best-in-class rewards experience to our consumers.»

Similarly, Afterpay has ceased its Pulse Rewards program, in operation since 2020, indicating a forthcoming replacement. The company stated, «Our brand-new rewards program will launch in 2024,» but did not elaborate further on details. However, the remaining points from the defunct program are no longer usable.

Notably, while Affirm and Afterpay are altering their approaches to loyalty, competitors like Klarna persist with their rewards programs. Klarna’s model rewards points per dollar spent, redeemable for discounts at specific merchants.

The adjustments in loyalty strategies come amid a broader shift within the BNPL industry towards subscription-based models to foster sustained customer interaction. For instance, Afterpay offers the Afterpay Plus Card, a subscription service priced at $5.99 per month, which expands the BNPL merchant network accessible to users.

Affirm, on the other hand, has hinted at a subscription service named Affirm Plus, as revealed by code discovered within its iPhone application. The speculated benefits of this service include a 0% APR on installment loans up to $2,500 and potentially higher interest rates on savings accounts.

The attractiveness of BNPL options to consumers is evident, with a significant portion of shoppers utilizing deferred payment plans. According to a PYMNTS Intelligence report, 28% of surveyed U.S. consumers had utilized BNPL options in the preceding three months.

Moreover, the availability of BNPL influences consumers’ purchasing decisions significantly. A separate PYMNTS Intelligence report revealed that 43% of BNPL users would delay purchases or opt for cheaper alternatives if BNPL were not available.

As the competition for consumer loyalty intensifies in the BNPL space, providers are continually innovating their offerings. The PYMNTS Provider Ranking of Buy Now, Pay Later apps underscores this competitive landscape, with Zip, Klarna, PayPal, Afterpay, and Affirm among the leading contenders.

The adjustments made by Affirm and Afterpay underscore the dynamic nature of the BNPL sector, with a pronounced shift towards subscription models and heightened competition for customer loyalty poised to define its future trajectory.

Other articles
Signicat: Organisations Are Still Unprepared to Fight AI-Driven Fraud
Bowhead Specialty and Kalepa Improve AI-Driven Underwriting
Retail: Adopting POS Systems, Digital Wallets, BNPL
Swift Is Testing AI to Fight Fraud
How Should Financial Institutions Transform Their Operations Using Gen AI
Business-to-Business Innovation: Leverage, Artificial Intelligence, and Embedded Experiences
Emerging Trends in Insurance and Financial Technology
Simplifying Cross-Border Payments: Fuse Technology’s Impact in the GCC
Thredd’s CEO Jim McCarthy on the Future of FinTech
Revolut Expands Mobile Wallet Partnerships in Africa for Faster International Transfers
Alibaba Cloud Expands Global Footprint and AI Talent Development Initiatives
BBVA Improves Productivity via Strategic Open AI Cooperation
New Era of Payments: Pay-by-Bank Solutions
Banks Must Adapt to an Evolving Open Banking Landscape
Fintech Innovation Needs to be «Mass Produced»