Klarna and Flybuys pair up to bring BNPL offering to loyalty points program

European BNPL player Klarna is partnering up with Flybuys in Australia, combining a split payments solution with good old-fashioned loyalty points.

Set to launch in May, the partnership will allow members of Klarna’s rewards club to sync their accounts and convert their points — called ‘vibes’ — into Flybuys points, once they’ve paid off the full purchase.

For each $1 spent through the Klarna rewards club, members can collect one ‘vibe’ — which then equates to three Flybuys points.

Flybuys members can also access 1,500 bonus points when they link their account and make their first payment through Klarna.

The partnership represents something of a meeting of ‘old’ and ‘new’ retail models.

Founded in Sweden in 2005, Klarna made its entrance into the Australian market in January 2020, coming out swinging in a buzzy sector dominated by the home-grown BNPL giants Afterpay and Zip.

Flybuys, on the other hand, was established back in 1994 and still operates as a fairly straightforward points-for-rewards concept.

Speaking to SmartCompany, Flybuys chief executive John Merakovsky, says BNPL has been one of the “great innovations” in payments over the past couple of years.

Partnering with a BNPL provider, therefore, seemed like a natural progression. It was an opportunity to bring more value to his own customers, “and also to attract a new generation of shopper” to the program, he notes.

For Fran Ereira, Klarna’s country head of Australia, the partnership doesn’t necessarily represent a meeting of old and new retail solutions.

Rather, she sees it as a meeting of two customer-centric businesses.

Australians are avid fans of a loyalty program, and have spent years investing in them, she notes. But, they’re also increasingly demanding flexibility.

Demand for BNPL options is only increasing in Australia, and there’s now an expectation not only that such solutions will be available, but that consumers will be rewarded for using them.

That’s been spearheaded by the younger generations, Merakovsky notes. But, it’s being normalised, and spreading into other customer segments, too.

Flybuys is all about offering consumers more choice and more value, he says. So, bringing a BNPL element into the scheme “seems like an imperative”.

‘We don’t feel threatened’

Over the past year, the BNPL trend has gone gangbusters in Australia. Both Afterpay and Zip have seen sizable increases in their share price, and new entrants cropping up to tackle everything from invoice financing and advance wage payments to whitelabel BNPL options for big brands.

In the past few weeks, both fintech giant PayPal and Commonwealth Bank Australia have announced their own BNPL offerings, each free of commission fees for merchants.

In the retail sector, we’re witnessing a shift in consumer behaviour.

Consumers want personalised and curated content tied into their shopping experience, Ereira suggests, demanding “the flexibility to be able to shop in a way that’s meaningful to them”.

And, she’s not at all concerned about the multitude of competitors that are emerging.

In fact, she doesn’t even consider Klarna as a payment service provider. Rather, it’s a shopping app, that creates “a very personalised, immersive experience”.

And it’s an app that’s operating in the US, where PayPal first launched its own BNPL service, and in various other markets where there are various other players in this space.

“We certainly don’t feel threatened,” Ereira says.

In fact — if anything — she welcomes the competition, seeing it as something that offers consumers more choice, and strengthens the ecosystem as a whole.

Ultimately, consumers will gravitate towards the products, platforms and services that best suit them.

“Innovation needs to be at the core,” she explains. But it’s by no means the be-all and end-all.

“Unless you truly put the customer at the centre of everything … innovation is not necessarily going to drive the outcomes that you’re looking for.”