Prime Days are near and soon packages will be piling up on doorsteps all across the US. In 2021, Amazon Prime Day alone brought in $6.8B in the US. This year, many of Amazon’s 200 million Prime members will be flocking to the site. Other retailers such as Target and Walmart that have followed suit with their own versions of Prime Day can expect the same.
Large purchases mean large transactions. Large transactions are when cardholders need support from their trusted financial institutions and the tools available to manage their payments most. So how can financial institutions pay closer attention to these critical moments?
Affirm, Amazon Prime, and the purchase-to-payment process
With mounting economic pressures this year, consumers are looking for ways to make payments more feasible for their financial needs. Many of these consumers will be turning to Buy Now, Pay Later (BNPL). 69% of consumers stated they’d be interested in using BNPL for necessary services.
Last year, just in time for Black Friday shopping, Amazon partnered with third-party BNPL provider Affirm to give Amazon Prime Members the chance to spread their purchases above $50 into monthly installments with no late fees and no credit cards necessary. This partnership with Affirm is validation of the power of BNPL when it comes to customer acquisition and motivation to buy. In fact, BNPL has the potential to add an “increment of 7%-10% GMV growth rate to online, physical stores, and third-party seller services due to extra value-add”.
Amazon mainstreaming BNPL is also an example of how retailers are not-so-slowly attracting cardholders away from their trusted financial institution.
Shopping events are leading indicators of cardholder need
When the American consumer is struggling with the rising prices of groceries, text books, and tires, they are accepting BNPL offers from entities that depend on their accepting the loans to drive sales.
This should raise red flags for financial institutions who hold their account holders’ financial health as their highest and most esteemed value. Instead, financial institutions should look at these moments as opportunities to help. Here are some examples:
- Is there an increase of third-party BNPL transactions around shopping events like Prime Day? (We can help). While transaction data doesn’t show the full extent of BNPL uptake, it is a good indicator of the shift in cardholder payment preferences.
- Are your cardholders experiencing financial stress from these shopping events? Do you see an increase in NSF charges in the immediate weeks and months after? How can you step in to help them out?
- What can you do to help your cardholders plan ahead? If your cardholders know ahead of time which financial tools are available to them as they go into these discount shopping days, they can shop with more ease (and with your products top of mind). These are key financial educational and engagement moments not to miss out on.
- Is there a better option for them when it comes to BNPL? Hint. Yes. BNPL is far more cardholder friendly when it comes from you, their trusted financial institution. In fact, 70 percent of BNPL users would prefer it that way. (So what are you waiting for?)
Excuse our pun, but we might say there is a PRIME opportunity for financial institutions to step in. Banks and credit unions should be prepared and proactive for their cardholders when it comes to these shopping events and join them in the purchase-to-payment journey.
As a financial institution, Prime Days are for you too.