COVID-19 pandemic gave rise to various trends, and BNPL or buy now pay later is one of those trends. Even though BNPL has been around for a few years now, it gained extreme popularity when people around the world were locked inside their homes.
Since many people were receiving only 50% of their actual salary, BNPL offered a solution to purchase necessary things by paying just a fraction of the total amount. Initially, it was Gen Z and millennials who were making the most out of this opportunity, but nowadays, even Gen X is joining the trend.
And this sudden surge has increased the count of merchants and retailers offering BNPL as an option, even for products that range between Rs. 7000 and Rs. 8000.
But, there are many e-commerce merchants who are still hesitant about adopting the Buy now pay later for Merchants payment service option. If you are one of those, then this guide will walk you through BNPL details – the benefits and adoption process.
What is the BNPL Process?
Buy now pay later, as the name suggests, is a process of letting customers purchase an item without paying the full amount for the same upfront.
You can even use the term “instalment payment” to describe BNPL in simple terms. Buy now pay later solution is quite equivalent to traditional solutions like layaway plans and store credit.
With the buy now pay later solution, the customer is provided with an option to purchase the product now and pay later while initiating the payment procedure. Based on the BNPL solutions provider you choose, you can offer your customers various instalment options.
Consumer Finance VS Card-Based Instalment
There are two categories in BNPL solutions – consumer finance and card-based instalment. Both of these options have a different impact on shoppers’ experience and satisfaction with your services.
With consumer finance, your shoppers will be required to apply for a credit card when they begin to complete their purchase, provide their personal details and request credit card approval. No matter how much credit your shopper will have on their credit cards, this will be the new line of credit for them.
For instance, the Rs. 10,000 purchase will mean Rs. 10,000 of additional debt, not including the potential interest charges and other fees. Every solution that enables the merchant to provide an instalment option combines a certain degree of new credit application and approval as well as some additional charges for the shoppers. This is because, even though the process looks like instalments, it is actually a financing form.
The card-based instalment, on the other hand, doesn’t require shoppers to apply for any extra credits. Instead, they use their existing card to make the number of payments as per their needs. As a result, the shopper is able to better control their finances. Besides the cardholder’s interest rates, there are no additional interest charges here.
How to Determine the Best Solutions from So Many Options?
The best thing here is that you can offer various BNPL solutions side-by-side, just like offering multiple digital wallet options at once. This way, you can reach as many shoppers as possible because you are ready to cater to your shoppers’ needs, irrespective of differing needs and preferences.
Benefits of Buy Now Pay Later
Similar to how Buy now pay later makes things easier for shoppers, it holds a few benefits for the merchants, too, such as:
- Enhanced sales value: The addition of the BNPL feature to your existing operation can directly increase the value of sales. Similarly, the implementation of BNPL products to e-commerce can assist in boosting conversions. This is because more and more people are expecting to receive such features while shopping. When you offer it, people tend to come back to you for more shopping convenience.
- New customers: With buy now pay later for business, you can also attract those customers who were hesitant to purchase from you because the price was out of their budget. In fact, with BNPL, you can attract different demographics along with price-conscious customers.
- Boosted loyalty: When you offer what is the customer is expecting, you end up being on their good books. Your customers will appreciate your offerings and even further promote your offerings to their near and dear ones. And since BNPL make the process seamless, therefore enhancing the customer experience; eventually, your shoppers tend to come back for more.
Almost every retail setting offers a frictionless, contactless experience along with mobile wallets at the checkout. Not offering BNPL in the combination of these services makes zero sense, especially when customers are seeking to increase convenience with their shopping experience.
Besides, it is evident that offering BNPL services leverages your business in various ways.