What is BNPL(Buy Now, Pay Later)?
In simple words, Buy Now, Pay Later (BNPL) is short-term financing that enables the customers to purchase things and pay for them over time in installments, which are often interest-free. In this year, BNPL has become an amazingly helpful payment method, mostly for online purchases, referred to as the point of sale installment loans since it’s such a convenient process for customers.
How Do You Buy Now, Pay Later Works?
If you have learned about what exactly the Buy now, pay later program is, the next thing you need to know is that this BNPL method is not the same for all the companies. Terms and conditions differ from company to company, but there are some general steps for point of sale installment loan which follows :
- First, you are purchasing something at a participating trader and picking out buy now, pay later for payment.
- Then if it shows your choice has been approved you can pay a small amount such as 30% of the whole amount.
- After that, you have to pay the rest of the due amount in installment which is certainly interest-free as mentioned before.
- There are different methods for completing the payment process. You can pay via bank transfer or via UPI, debit card or simply in check.
In the case of brands, the BNPL option will provide you with an extra payment method that can decrease the extra cart rates. One research study says that checkout conflicts caused over 33 billion in missed gross income in the U.S. which is almost equivalent to 8% of US digital sales for 2017. So, if people having stores in Shopify should consider adding a buy now pay later Shopify option.
On the other hand, shoppers find installments a better and money-saving option in comparison to debit or credit cards which charge almost a 17.62% interest rate. When economic uncertainty and poor unemployment hit hard, consumers start to use the BNPL method to avoid their debts.
There are also some obstacles along with the advantages to using the buy now, pay later method for Shopify consumers.
Also check out: What kind of impact E-Commerce can have on your Business
Why should a “Buy Now Pay Later” option be there?
- Due to the flexibility of the BNPL method, consumers are more likely to choose this method to invest in a particular product. Because it help to pay in installments, for those who want to make a purchase immediately but are not able to complete the payment instantly.
- To maximize your reach, only credit or debit card options are no longer sufficient. Credit cards can also be a great method to purchase something. But there will be less customers who own a credit card. These days, since young adults or millennials are mostly into online shopping, only four out of eight own a credit card, maybe.
- The main point for buyers is to know that the payment methods are changing drastically for young consumers who are already enjoying the ability to pay digitally or any other installment process.
- Moreover, over 88% of people want an easier way to pay in installment which is also not a credit or debit card. So, by not offering these different options, you are more likely leaving lover time that is not a credit card. And leaving expected money in the wain.
- Since the online shopping cart is becoming too expensive, the customers tend to show interest in the installment payment method. That lets buyers make purchases now and pay over time that gradually reduces shopping card load rates.
For this reason, the stores which have added this BNPL method for shopping online, increased the checkout conversions by almost 45% for first-time visitors on average. This will help in reducing card abandonment which will further help in increasing sales.
If return rates get high every day, it can affect your store. When customers are returning their purchased products, it keeps adding unwanted trouble in your store. For that, interest-free installments would be a better option.
Global Expansion of BNPL :
The rapid growth of buy now, pay later solution and customers’ good feedback made this method globally popular and effective. This industry has been chosen after getting a similar shopper profile and their shopping choices. Such as Canadian or American consumers have the interest to use more flexible methods for payment. There are so many different stores available in Shopify that offer this buy now pay later Shopify solution. This expansion also offers a completely new market for these audiences.
Also check out: Things To Do To Save Purchases By Using Coupon Codes
This rapid global expansion of this easy and flexible method, buy now, pay later has been proved as useful. And essential for those merchants that export things in more than one country or use multiple currencies.
Therefore, it’s important to add alternate payment options in your store that fulfills your customers’ desire and makes them happy.
Allison Janney is a Sales & Marketing Manager at ChargeAfter. She likes to share content on the Finance Industry. Like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable readers.
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