The COVID-19 pandemic has hit the market hard, especially small and medium businesses often run by solopreneurs who deliver custom, unique products. Reports show that as the government-imposed lockdowns grew stronger, people flocked to shopping online and they preferred BNPL (Buy Now, Pay Later) methods over credit cards and other such methods. According to a study by Mozo, it was found that around 30% of all Australian adults have used the ‘Buy Now, Pay Later’ option at least once in their shopping experience. So what makes it such a hit, especially before credit cards? The answer lies in a myriad of reasons, namely:
Firstly, there has been a certain awkwardness when it comes to traditional credit payment methods for millennials and generation Z in general, because of bad credit history. On the other hand, the BNPL option equips customers to shop for stuff without any huge interest sum or any prerequisite of credit scores and metrics for a customer to be applicable for availing such offers. Since BNPL spreads out any significantly large amount of expense into smaller, convenient installment payouts, customers find it simpler to shop without spending massive chunks of money altogether.
Secondly, as customers now get the leg space of regular payment blocks paid without any interest over a period of time, they can now shop more frequently than before. Since businesses receive a straight cut from each of the customers’ ‘Buy Now Pay Later’ orders, they also encourage existing and new customers to get aware of such offers as a nudge to shop more – both in numbers and frequency.
How Exactly Does Buy Now, Pay Later Work?
The Buy Now Pay Later method is a product of today’s fintech that gives a robust solution for customers on a tight budget and unable to pay the entire cost in one go. While traditional store card APRs and credit cards also help customers to buy more stuff, these often come with high-interest rates that often lead customers to pay almost 1.5x to twice the amount of the product. Unlike such ripoffs, the Buy Now Pay Later option gives the leash to the customers’ hands as they select from the time-frame of installments from already existing, interest-free, loan packages that don’t cause any financial strain in the long run.
In today’s world, when the majority of your audience is millennials, chances are they’d be fond of having multiple payments and product options for completing their purchase especially in the middle of a pandemic when people have been known to reduce their expenses in the majority, adhering only to essentials. The customers can also make payments faster, easier as every time they shop they don’t need to provide their card details, recharge their wallet or log in to their net banking option. Instead, such options come with a ‘Scan & Pay’ option for a seamless payment process. In general, BNPL options are generally based on two types, first, where the customers can choose to select installments in the time duration of a few months. Second, it can be about paying the entire sum in full within a month.
Here’s how it all adds up:
# Satiating Customer Experience
Reports say that 76% of all customers would be more interested to complete a purchase when they’re backed with a payment scheme that is lightweight in terms of the amount paid upfront and has full-funnel, cohesive, transparent transaction ways. As a business owner, you can provide existing/new users with loyalty points and reward schemes respectively for nudging them to shop again and again.
# More Sales
A viable way to generate more sales, the Baymard Institute reveals that product pricing is the second-most major issue that causes cart abandonment. Let’s face it, no one wants to have a monetary tremor each time they shop the latest merchandise of their favorite brand impulsively. In fact, with meaningful BNPL options, you can also optimize your average order values by 20-30%.
# Earn Customer Loyalty
Unlike any other payment method, BNPL also offers free returns – but, only a few people have the knowledge about it. While many eCommerce brands offer no-questions-asked returns and other quick and easy return policies for customers to comprehend if the product suits them well, BNPL schemes come with in-built schemes. A UPS conducted study shows that 66% of all customers often reconsider shopping online based on the returns programs offered by a buyer, especially when they’re buying out a certain type of product for the first time. Thus, it nurtures a deeper trusting relationship between the customer and the retailer over the period of time and sets up a strong clientele.
# Clubbing All Payments Securely
With BNPL your customers can shop multiple times in a span of days, and instead of filling out bank details multiple times in each transaction, they can now complete the payment at one go in checkout as a single transaction. This also keeps them safe from any phishing possibilities and comes as an additional line of security.
# Better than Cash On Delivery
The Buy Now Pay Later schemes can make your customers bid farewell to all their issues related to product delivery delays when they’re not around, or fishing out the exact change amount that comes with the Cash On Delivery option.
In a Nutshell
The millennials may comprise the majority of the adult population now, with Generation Z in the close second. The interesting fact about both populations is that they’re known for their distinct preferences for flexibility. As these adults grow weary about having credits, the buy now pays later option gives them access to make bulk purchases spread across payments over time, without any lump sum interest rates. In short, a close win-win for both retailers and customers. If you need help implementing buy now pay later options in your checkout, and wouldn’t know where to start, here are a few recommendations that can be worthwhile:
Software Developers Pro, Las Vegas
They’re a custom eCommerce and web development agency, specializing in PHP and other related frameworks. They also provide third-party integration, custom APIs for various devices, and many other services for different B2B and B2C clients, which makes them a good fit for brands looking to have access to full-spectrum, dynamic PHP development.
SpurIT, Illinois
A full-service Shopify development company delivering targeted solutions for Shopify home page, collection page, product page, and more. They also deliver several smaller projects related to Payment integration, ERP, Warehouse integration, etc. Their years of experience and proven expertise can be exceptionally handy for eCommerce brands from different verticals.
CodeClouds, Indiana
An award-winning eCommerce development enterprise, their global team of 500+ professionals are amongst the most trusted to hire eCommerce developers. They can help you link compatible payment solutions, easily integrate third party applications, and add more checkout options to your website in quick, hassle-free ways.
