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Afterpay Launches a Loyalty Program That Rewards Responsible Spending, Not Greater Spending

Recent reports have shown that there is consumer interest in premium loyalty programs, as shoppers look to connect more deeply with the brands they buy from. But a new program from payments solution Afterpay disrupts the traditional loyalty model, choosing to rewards its users for responsible financial behavior — not dollars spent.

“We know that millennials and Gen Z are making a conscious choice to use debit cards, yet their responsible decision of spending their own money is not rewarded,” an Afterpay spokesperson told FN. “We want to change that. Our goal is to incentivize Afterpay users who pay on time, while simultaneously giving retail partners an opportunity to reach the world’s most valuable consumers: highly engaged, high-frequency shoppers.”

Afterpay is launching Pulse, an invite-only loyalty program that rewards its most financially responsible users. Eligible users will gain access to benefits like increased payment flexibility; no required upfront payments (on eligible purchases); exclusive discounts and promotions; and the ability to shop at 50 top retailers like Sephora and Macy’s.

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Traditional loyalty programs tie rewards to the amount of dollars spent by the consumer, which may exclude lower-income shoppers or those trying to keep to a budget — which is common in younger demographics. By comparison, Pulse gives benefits to the shoppers that consistently pay each of their installments on time, regardless of total amount spent.

This works as part of the company’s broader commitment to promote financial responsibility. Unlike some other installment payment providers in the marketplace, Afterpay does have a late-fee policy that charges shoppers for each late installment, capping out at 25% of the total purchase amount. Users are prohibited from making additional purchases while late fees are outstanding.

Afterpay assumes the risk for future payment collections, paying the merchants the full amount upfront, while the consumer only pays 25%. Therefore, the company also has an incentive to promote the use of installments as a smart budgeting tool, not as a line of credit. When used in combination with the Pulse program, the company hopes it will help users see the importance of sensible shopping.

“Until today, loyalty programs across our industry have encouraged excessive spending — leaving no options for those shoppers who want to spend responsibly and avoid expensive fees and extended debt,” said Nick Molnar, co-founder and U.S. CEO of Afterpay. “We built Pulse to fulfill a need and offer a program in which both consumers and retailers benefit.”

While there is no capability to earn redeemable points for purchase, the program does include promoted engagement with particular brand and retail partners. In this way, merchants can also benefit from increased exposure to — and potentially an extended relationship with — reliable consumers.

Pulse will be offered to the platform’s eligible U.S. customers in the coming days. Similar programs will be rolled out to the New Zealand and Australian markets in future weeks; U.K. users, who know the company as Clearpay, will receive access to the program in a few months.

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