The deferred payment space has revolutionized the global retail industry. An increasing number of merchants and consumers have realized the benefits of adopting an interest-free installment payment option. Notably, this has resulted in more and more FinTech startups and legacy payment providers launching their own deferred payment products. As the BNPL space continues to become crowded with several small and large players, established buy now pay later (BNPL) firms are leveraging artificial intelligence (AI) to differentiate their product offerings and enhance the value proposition.
Afterpay unveils new analytics platform for merchants
In August 2021, the Australian BNPL firm, Afterpay, announced the launch of its new merchant analytics platform, Afterpay iQ. The launch of this new analytics platform from Afterpay comes at a strategic time when consumers globally are increasingly adopting the use of interest-free installment payment solutions to fund their purchases.
With the new and powerful AI-powered analytics tool, Afterpay’s retail partners’ get access to valuable customer-centric analytics to help optimize the investment and drive growth. Notably, the AI-powered platform offers the analysis of various operations, including drilled-down demographics available on a store-by-store basis, Omni-channel shopping quantities, and real-time data through the self-service user interface. Moreover, the Afterpay iQ platform will also provide merchants with a recommendation engine that offers insightful actions, allowing them to optimize performance based on analytics.
Retailers improving their ability to target new audiences through their partnership with Afterpay
BNPL firms are continuously innovating to differentiate their product and enhance the value proposition for both consumers and merchants. Notably, Afterpay has created a significant value proposition through its BNPL platform for merchants globally. From lead generation for merchants to help them make data-powered marketing decisions, Afterpay is continuously improving its BNPL platform. For instance,
Through its partnership with Afterpay, Pandora has taken strategic data-powered marketing decisions that have helped the online retailer to improve its ability to target new audiences. This has allowed the online jewelry retailer to experience higher conversion rates and larger average order value. According to Pandora, their partnership with Afterpay has led to successful results in capturing new and highly engaged young customers for the business.
With BNPL spending increasing quarter-on-quarter, PayNXT360 expects more and more BNPL firms to leverage AI to create more value for their consumer and merchant partners. Additionally, Gen Z and millennials consumers have more inclination towards using BNPL payment methods for completing purchases. Spending from these consumer groups is expected to increase nearly 50% by 2030, showing the growing need for BNPL products.
Klarna leveraging AI to increase consumer demand
With the growing adoption of e-commerce, consumers are increasingly looking for personalized recommendations, inspiration, and flexible payment options where they consume content. Notably, the enhanced range of marketing services from Klarna can help merchants keep pace and reach the right customer, without the need for merchants to have the resources or create specialized content.
After Toplooks AI, Klarna has combined the tools with a new, AI-powered dynamic ads function. Notably, the function uses artificial intelligence to take a product from any merchant, recognize products, categorize, classify and then create beautiful and bespoke images. These images are made instantly shoppable, along with the insertion of relevant messaging and payment options.
Moreover, the images are dynamic and refresh every 30 minutes, allowing merchant partners to display in-stock inventories, update messaging, create, test, analyze, iterate, improve, and then amplify across Klarna and other channels. This approach has allowed merchants to experience a dramatic increase in click-through and conversion rates.
PayNXT360 anticipates that it is more important than ever for merchants to create fresh, curated, and engaging experiences to unlock new growth opportunities with customers. Therefore, these AI-powered product offerings from BNPL firms become a strategic play for their growth and the growth of merchant partners. Moreover, it can also be expected that many BNPL firms leverage AI for differentiating their product offering and enhancing value propositions over the next few quarters.