Retailers looking to gain an edge in the market are presented with a real opportunity. BNPL is fuelling the long-growing trend of online shopping to transform business as usual. Let’s look at how retailers offering BNPL options are ensuring next-level convenience for their customers.
In today’s fiercely competitive markets, customers are flocking to brands that are able to keep up with their changing expectations. The Buy Now, Pay Later (BNPL) solution has been a hit with customers and businesses alike. For customers, it comes down to the ease of making purchases and paying for them at a future date, often interest-free. Unlike high credit card fees and unreasonable Annual Percentage Rates (APRs), BNPL is easier on the pocket.
One of the many opportunities presented to retailers is that it removes barriers to shopping. The fact that payment is deducted from the source allows for bypassing interest incidental to the customer. That said, there is a feature of a small commission that needs to be paid by the participating retailers to the provider.
Let’s delve into the reasons for the rising popularity of BNPL and how this payment option has revolutionized the online shopping industry.
The power to purchase is the most critical aspect of the growth of commerce in general. If customers are expected to buy certain products or services, they should be able to afford them. According to observations, the majority of people who choose BNPL—do so in order to postpone payments. BNPL offers consumers a choice to save money today, redirect it to essentials, and still own something that falls lower on their priority list.
This does not mean that people who can afford the goods right away do not use BNPL. In fact, everyone likes to defer payments if they don’t have to pay interest for such a facility. Owing to its flexibility, BNPL is widely used by Gen Z and Millennials, with over 44% of them choosing it 0ver credit cards. Gen Y, better known as millennials, comprises the largest swathe of the population in the U.S. and holds a significant $2.5 trillion annual spending power.
The ability to delay payments without incurring interest on purchases is great for the wallet and allows customers to test the product without committing to the purchase right away. This has a twofold advantage. On the one hand, it gives the customers the flexibility to be satisfied with the purchase. This removes the possibility of wasteful spending for them. They can ascertain the usability and suitability of their purchase, not just virtually but also in physical form. The flexibility factor is one of the many reasons why the introduction of a credit period is expected to bring a 1,200% growth in the U.S. BNPL lending market by 2024.
Retailers can also leverage the psychology of impulse shopping by using digital marketing techniques. They can opportunely present a product to the target group, such as moment marketing. These techniques have been found to work in favor of the sellers.
But merchants must be equipped with omnichannel payment systems to encash such strategies and offer their digitally-forward customers a cohesive payment experience.
The most crucial aspect of the popularity of the BNPL payment option is its seamlessness. People not only like to defer payments but also find it convenient to get purchase-driven custom loans for specific needs. They can avail attractive EMIs without the need for collateral. The way BNPL is solving the issue of credit in many parts of the world, structured around customers’ shopping history—is also the reason for a shift in consumer behavior.
With the recent breakthrough made by the E-commerce industry, retailers are looking to stay in the game by creating the perfect checkout experience for all buyers. As the card abandonment rates are hovering around 70%, BNPL offers a 30% improvement in checkout conversions. The same report also finds an average ticket sales increase of 30-50%.
With BNPL’s growing popularity, merchants and payment providers are pushing payments forward to meet customer demands. As a result, they are setting new standards of excellence in the payments ecosystem. Having helped many of our clients with outcome-driven payment solutions, we would be happy to connect with you and explore how we can help you reimagine digital commerce with next-gen payment solutions. Talk to us here.
We’re giving you a fresh dose of insights, perspectives and the latest trends from the world of payments.