If you operate an online store, you’ve probably heard of the ‘Buy Now, Pay Later’ (BNPL) option that exploded alongside the e-commerce boom during the pandemic. As online stores adapt to customer demands and preferred payment options, many e-commerce stores have started offering user-friendly and flexible payment options.
These solutions are quickly gaining popularity because users don’t pay interest or need a credit check to qualify. They also integrate directly with e-commerce platforms. Pay-later options are the most common among millennials who also make up the majority of online shoppers. Usage will likely continue to increase as consumers try to avoid accumulating additional debt or incurring interest on their credit cards. In addition, for businesses, it allows them to offer a flexible service while being paid in full immediately and at no additional cost to them. This explains why more and more online stores have adopted this flexible payment option, which is currently used by more than a third of US customers.
WHAT IS BNPL?
As the name suggests, “Buy Now, Pay Later” is a third-party solution that offers flexible payment plans to online shoppers. All without interest or hidden costs. Most of these providers offer flexible financing options and simple installments to meet customer needs. This option benefits both customers and online store owners, as stores are paid in advance. BNPL service providers eliminate customer credit risk, freeing your business from monitoring payment collection.
WHAT ARE THE BEST BNPL TOOLS?
More and more BNPL service providers have entered the market as this service gains popularity. However, you need to determine the payment options offered by the supplier to your customers. While most vendors have different solutions, common plans include;
Interest-free installment payment (usually four equal installments)
• Payment in 30 days
• Funding from 6 to 36 months
The best solution for your business depends on the buying behavior of customers and selling margins. Among the many providers, below are some common BNPL providers that integrate seamlessly with major ecommerce platforms.
Afterpay is a popular BNPL tool used by most big box retailers, such as Sketchers, Urban Outfitters, Anthropologie, and Free People. The solution allows consumers the flexibility to pay for their orders in four payments. These payments take place once every two weeks. The plan also has no interest or additional fees if the customer makes their payments on time. If a customer pays late, they will be charged a late fee.
Affirm is a flexible omnichannel payment solution with no hidden fees. However, Affirm has a 0-30% interest charge for customers who make large purchases. The tool offers extended funding for up to 36 months and integrates with BigCommerce, Wix, Shopify, Bolt, WooCommerce, and other platforms. This is a great option for ecommerce stores selling higher priced items.
Klarna is a personalized BNPL solution that offers four interest-free payments to customers. The tool submits payments to businesses in advance and does not affect customer credit scores. Klarna offers two payment options; 30 day funded payments and 6 to 36 month funded payments. The latter payment option is best for businesses that sell bulky items, such as gym equipment and furniture.
Even with the opening of physical retail stores, online shopping will not slow down. Customers seek convenience and will buy and pay for their products in a way that is convenient for them. Even though BNPL flourished alongside e-commerce businesses during the pandemic, BNPL is also part of the in-store shopping experience. Several brick-and-mortar retail stores have also started offering later payment options at checkout. Therefore, customers are very likely to maintain their appetite for BNPL solutions in their daily online or offline purchases.
Thousands of online stores have already integrated flexible payment options for their customers. In fact, Buy Now, Pay Later is expected to generate over $ 680 billion by 2025. Therefore, you are missing out on something if you haven’t considered this payment option for your business. Buying now, paying later not only improves your bottom line, but can also impact your customer’s lifetime value by removing barriers to purchase.