As the world becomes increasingly digital in response to the COVID-19 pandemic, consumers have more freedom and flexibility than ever before – payment options are no exception. One of the fastest growing payment options is Buy Now, Pay Later (BNPL).
Offering more payment options to your customers will increase your sales while building trust. There are a lot of payment options to consider as an ecommerce business owner. But to win big in today’s commercial battlefield, taking advantage of “Buy Now, Pay Later” is essential.
The BNPL payment model has seen a massive rise in popularity over the past year or so with an overall market share of 2.1% (impressive for such a new offering).
Whatever your niche, your customers will expect you to offer a BNPL option – and as more shoppers take advantage of these services, by embracing the peak of this rising wave, you’ll enjoy an increase in sales.
Here we explore the BNPL model and look at ways you can use it to boost your business.
What is “buy now, pay later”?
The BNPL payment model is fairly straightforward, which is one of the main reasons for its popularity from a business and shopping perspective.
A customer purchases an item or service at checkout, using the Buy Now and Pay Later app. Instead of paying up front, they agree to pay a certain number of repayment installments over a specified period.
The concept of credit or paying for something in installments is not entirely new. But, along with increased flexibility and digital functionality, BNPL is a powerful driving force for sales. The ability to use the Buy Now app, and pay later to buy goods or services casually anytime, anywhere, with minimal friction (and little or no interest) enjoys its time in the sun.
Not only can BNPL help you gain more sales and build trust, but it can also increase your average order value (AOV) by up to 33% (which means more revenue).
As this e-commerce phenomenon continues to rise, a growing number of established brands including the likes of Walmart, Adidas, and Etsy are offering buy now and pay later options to their customers. To tap into these more lucrative markets, the likes of PayPal are now offering BNPL services to businesses while innovative new buy-now-pay-later providers are emerging from the digital woodwork. For example, WiseStack recently got a huge investment of $45 million to develop its services.
Who Uses BNPL Services?
According to StartUp Talky, the following is the percentage of online shoppers who actively use the buy now and pay later services by age group:
- Shoppers ages 18-25: 33%
- Shoppers ages 26 to 34: 40%
- Shoppers ages 35 to 50: 62%
- Shoppers ages 51 to 64: 16%
Related: How to start an online store in 3 steps
Do’s and Don’ts in offering Buy Now and Pay Later services to customers
It’s clear that shoppers across age groups are hungry for BNPL payment options. To help you ride on top of the ever-growing e-commerce wave, here’s the do’s and don’ts of the Buy Now, Pay Later offer.
Do you know your service providers
Before you commit too hard to buy now, and pay later to the provider, you should consider who your customers are in terms of behaviors, buying preferences, and most importantly, demographics.
In addition to understanding your customers, you should look at your business budget as well as your main business goals. Armed with this information, you can make informed comparisons between BNPL providers in terms of monthly costs, commission (almost all providers take their share of your BNPL sales) and features.
To help you in your task, here are some of the popular BNPL providers that you should explore:
- purple dot
- PayPal’s BNPL (result of purchase of Japanese flagship, Paidy, for $2.7 billion)
Related: 7 trends in online payments to watch in e-commerce
Don’t keep it simple
One of the main attractions of buy now and pay later is its sleek and streamlined simplicity. With this in mind, you should stick to only one provider to remove any friction from your exit trip.
If your customers have to stop and think about which BNPL provider to use, they may hesitate and go elsewhere – plus managing two providers can get messy.
You should also make sure that the buy now and pay later offer is visible and well located on your checkout page. Our guide to improving your mobile payment journey to customer success provides the tips you need to make your BNPL choice as seamless as possible.
Don’t forget to try before buying
Before you make a strict commitment to a particular BNPL provider, you should test it out for yourself.
If you’ve narrowed down your shortlist to two providers, you should research the brands that use the app or service and do some mystery shopping, noting all the pros and cons as you go through the trip.
Going through this process will not only help you understand the BNPL model on a deeper level but will also ensure that you will not encounter any unexpected customer issues later on by choosing the wrong supplier for your brand.
Don’t forget to collect comments
In the digital age, data is power. Once you roll out your BNPL payment option and improve your online payment process, it is essential to collect customer feedback.
By collecting reviews, testimonials and ratings, you can gauge whether your customers are happy with your BNPL service and make any necessary adjustments to improve your offering. Doing so will help you get to know your audience better while ensuring that you get the best possible return on investment from your efforts to buy now and pay later.
To collect customer opinions and feedback like a pro, read our guide on adding a feedback form to your website.
Investing in a Buy Now, Pay Later (BNPL) may seem like a big deal, but by taking the time to explore your options and following our advice, you have everything to gain.
To easily accept BNPL payments (plus a host of other popular options) and give your customers exactly what they want, GoDaddy Payments It is the tool you need for the job.