Nothing is more exciting to the modern shopaholics than the idea of buy now pay later services. If your business is online, the highest percentage of your customers are millennials, who are the main drivers of the eCommerce industry. If you want to earn their attention, you have to give them the shopping and payment options that work best for them.
What is buy now pay later?
The buy now pay later (BNPL) is just as the name suggests. It allows the shopper to buy without having to fork out the full payment at the purchase time. eCommerce shops that offer buy now pay later services let the customer choose a financing option and then pay the remaining amount in installments.
In a payment eCommerce solution that offers buy now pay later services, the shopper pays the products in about three to four installments, whereby the money is deducted from their payment card. The good thing is that the shopper does not incur any extra interest or payments as long as they pay on time. On the other hand, the eCommerce shop can move their products quickly out of inventory.
How does it work?
Many eCommerce shops offer BNPL services through third parties payment service providers. The customer enters into an agreement that requires them to make payments in the future. Suppose your company partners with a third party like PayPal credit to offer such services. In that case, when a customer chooses the BNPL option, your shop still receives the sale proceeds from PayPal, so this scenario equals credit card payment. After that, it is not upon you to chase upon the customer to pay up. The burden falls on the BNPL provider, in this case, the PayPal credit.
However, a buy now pay later provider will first conduct a credit check on the customer to avoid offering the services to people who have previously shown default of repaying obligations.
Why most eCommerce shops offer buy now pay later services
These days BNPL service is the new favorite for the eCommerce industry. Here is why eCommerce retailers offer it:
It boosts customer lifetime value.
If you have loyal customers, they will likely shop with you regardless of the payment options you provide. But, how much they spend in your shop is not guaranteed. The presence of BNPL services may be able to boost the value or frequency of their purchases. Even someone in a financial position can add products into the cart, and during checking out, they realize the total costs have exceeded what they have. If you have BNPL service, they will continue with the checkout, which increases customer’s lifetime value for your business.
Many eCommerce shops often have to deal with the issue of abandoned carts. But the presence of BNPL services is reducing the cart abandonment rates and thus boosting sales. BNPL influences customers ‘ buying decisions by increasing the probability of a purchase.
Good customer experience
Providing more payment options contributes to a better customer experience. Offering customers the flexibility to shop even when they are financially unstable boosts customer loyalty and increases sales.
With increased spending and reduced cart abandonment rates, the BNPL option is proving beneficial to eCommerce businesses. It is a rapidly growing trend in the eCommerce industry, giving online shops a competitive advantage.