The buy now, pay later (BNPL) concept has been around for many years. However, the last few years have boosted these payment options. BNPL is similar to layaway options and credit cards, with a modern twist. These payment methods are often seen as a win-win for both the retailers and customers. 1 in 3 consumers has used a BNPL plan for their online purchases. Let's look at BNPLs and how they can help you convert sales for your eCommerce site.
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What Are the Benefits of BNPL for Retailers
As eCommerce booms, many experts expect vendors and retailers to draw customers with the BNPL options. While there are plenty of benefits for consumers, those plusses also extend to the retailers.
Boost in average order values (AOVs)
When consumers have to pay all at once, they might leave behind some items. These clients will choose the most needed item and then return to purchase the other products. With BNPL, customers can buy all of those items at once. They can find a payment option that meets their budget. Plus, BNPL allows many to make those big purchases and spread out the payments over a few months.
Attracts new customers
Some consumers might not want to purchase at the time, but BNPL can change their minds. Many customers don't want to spend the total amount for the products, thinking many of these products are beyond their price range. You can build trust with your existing and new clients with installment payments, reaching more consumers.
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Reduces customer hesitation
Big purchases can lead to hesitation for many buyers. Everyone wants to find the best deal for their money. When customers must pay in full, they are less likely to complete the purchase. In some cases, they will search for the product at other retailers. BNPL provides the perfect opportunity for customers to make that decision the moment without any hesitation.
Get paid in full while the customer pays installments
When BNPL companies finance a customer, you are paid in full. Your eCommerce business does not have to worry about following up with the installment plans. These companies handle all of the challenging work. You can receive the total amount for the product, while the consumer can spread out those payments to accommodate their budget.
Easy to integrate on websites
Once you have registered and activated your account, it only takes a few steps to configure these payment methods on your website. The website will display these payment options during checkout. Most BNPL companies will allow you to customize the checkout with your branding and other information.
Brings a competitive advantage
With these payment options, you can be more competitive with big-box stores and other retailers. Consumers search for flexibility, especially with payment options. If you have the same product but offer BNPL, customers are more likely to purchase from your eCommerce site.
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How Can Buy Now, Pay Later Increase Conversions?
Take a look at how BNPL can increase sales conversions for your online store.
Reduces abandon cart
Many customers head to a website, search for products, add them to a cart, and leave. BNPL helps to reduce carb abandonment. Payment is often the top factor for leaving items behind in a virtual cart. With BNPL, customers will be more likely to complete their purchases.
Seamless shopping experience for the customer
Instead of grabbing a wallet and pulling out a credit card, customers can easily choose the BNPL option by clicking the button. Some BNPLs offer several payment options, making it a seamless experience for the client.
Boost customer loyalty
Offering BNPL will help keep those customers coming back to your eCommerce shop. Since they can spread out payments, these consumers will be more likely to come back and make additional purchases.
It is convenient for many consumers to make these payment plans. Many BNPL companies will automatically set up the installments. The client needs to connect a credit card, debit card, or bank account to complete the purchase.
Drives more sales
Flexible payment options mean more sales for your eCommerce site. Consumers are more likely to add more products to their carts since they can pay in installments. In turn, that means larger purchases from your online store.
6 Common Questions Retailers have about BNPL
Before signing up with a BNPL company, retailers might have questions about these payment methods. Here are the six common questions about BNPL.
How can I offer to BNPL on my eCommerce website?
Many retailers will sign a contract with a BNPL company. With that, they can add the signup tool to the checkout page. The setup process is straightforward as long as the eCommerce platform and BNPL integration can work together.
Are there any disadvantages to BNPL?
Most of the disadvantages are customer-focused. These payment methods allow consumers to accumulate interest and debt in some cases. Some BNPL companies also perform a credit check on the customer.Image source
Are there different types of BNPL service options?
There are two types of BNPL options: a consumer interest loan or a merchant transaction fee loan. A consumer interest loan has an interest rate applied at the time of purchase, allowing the retailer to avoid fees on their end. The customer is not charged for any interest with a merchant transaction fee.
Does BNPL have any alternatives?
Yes, there are alternatives, but they often involve handling all of the payments on the retailer's end.
How do retailers get paid with BNPL?
All retailers will be paid in full by the BNPL company. They get paid in full almost right away, minus any fees for using the platform.
What BNPL fees does an eCommerce website need to pay?
Depending on the BNPL company. These fees are often a percentage of the customer's final amount or can include a flat monthly rate.
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BNPL Is a Gamechanger for Ecommerce Businesses
BNPL is a win-win for both consumers and retailers. There are many benefits to integrating these payment methods for your eCommerce site. From building customer loyalty to reducing cart abandonment, BNPL is an excellent way to offer flexible payment options to your customers.