Over the past five years, the number of buy now, pay later (BNPL) businesses and options has skyrocketed. The boom began when the world’s largest online retailers integrated these options into their e-commerce experiences, and the concept quickly went mainstream across the retail landscape. More recently, amidst the pandemic and rapid shift to online spending, we saw the first BNPL players turn to the BNPL and partner marketing channel as a new revenue stream. Since then, the channel has become an exceptionally important part of the BNPL industry’s growth strategy. 

That said, the e-commerce and fintech landscape are both undergoing rapid transformations, making this a particularly crucial time for partner marketers and BNPL players in terms of laying the groundwork for a sustainable future together. Let’s take a closer look at this growing opportunity, as well as the areas where both sides need to focus their efforts to ensure responsible growth. 

Why All Eyes Are on BNPL 

The BNPL opportunity, while not a new concept, has been redefined for a digital world and has taken on significant weight in recent years. Retailers have flocked to these providers, with major players like Klarna now serving hundreds of thousands of global retailers, including names like Amazon and Macy’s. 

In terms of the money that flows through these systems, Juniper Research predicts that money spent through the BNPL market will nearly quadruple between 2021 and 2026, to eventually account for more than 24 per cent of global e-commerce transactions (compared to 9 per cent in 2021). At the same time, these services will widen their generational appeal. According to eMarketer, 80 per cent of BNPL customers in 2018 were millennials or Gen Zers 14 and over. That figure dropped to 73 per cent last year, as older generations began to embrace these newer payment options. However, millennials and Gen Z are expected to remain the predominant BNPL customers in the near future. 

While BNPL is seeing global growth, Australia has become the world’s hotbed of BNPL activity. The BNPL boom in Australia has attracted more than 30 players in recent years, the largest being names like Afterpay, Zip and Humm Group. Zip in particular has more than 2 million customers across Australia and New Zealand, and the company credits the BNPL trend as being a major contributor to the wave of Australians who have ditched their credit cards in recent years. The rise of Apple Pay is a consumer trend worth monitoring, as well.

How the BNPL-Affiliate Relationship Can Thrive

To thrive, BNPL and affiliate relationships need to acknowledge the unique challenges and opportunities of each other’s respective businesses and ensure their contributions to the relationships are mutually beneficial. Particularly as consumer watchdog groups increase their scrutiny of BNPL programs and their lending practices, it will behoove both sides to demonstrate responsible practices by structuring these programs for success upfront. 

From the BNPL provider’s perspective, there are three elements to consider when it comes to being successful in the partner and affiliate space: 

  • Audience size and scale
  • Marketing themselves as a media business 
  • Optimising their customer platform with the right advertising opportunities

Afterpay has the biggest audience in the Australian BNPL market. Other BNPL competitors, who may not have the same audience size, were quicker to invest in optimising their customer platform to drive more customers through their shopping and rewards platform. However, Afterpay is further investing and launching an enhanced shopping portal which they are now monetising for their merchants.

Different BNPL providers are targeting different demographics as they are seeing certain shifts ultimately leading to increased audience size, unlocking broader reach across the population that has higher spending power.

No doubt, the BNPL opportunity is big—and getting bigger every day. From the merchant standpoint, capitalising on this shift and giving customers more flexibility in payment options just makes sense. From an affiliate marketing perspective, we can leverage this shift to help drive the right advertising to the right audience using the data produced through buyer spending behaviour.

To continue to leverage the growth in the market the industry needs to continue to monitor the consumer buyer patterns for sustainable growth.

This article is written by Kelly Guerin, APAC director of partnerships at Partnerize.