I searched around online for hours and ended up going with this bag holder from Green Guru. (Seems sold out on the website but you can find it elsewhere online)
I have two on my bike. Been using it for 1/2 a year now, works great and it supposedly made from recycled fabrics. You simply plop your bag in it and go, and it folds away when not in use. Also useful for hauling large items in general.
I wanted a bag holder instead of an actual bag or backpack pannier because:
No worries about theft, no need to take the panniers with me, since it's just an empty foldaway rack
No worries about dirt etc from riding getting onto my clothes etc, unlike a backpack-pannier that you have to wear. The holder shields the actual backpack from the dirt
I chose this instead of a crate on top of the rack for the lower center of gravity (I initially went with a collapsible crate that I was going to attach to the top of the rack, but now I can actually haul things in the two Green Guru holders and still have room on the top of the rack to strap more things on, especially if it's oversized)