If you’re an online retailer and you’re wondering whether you should introduce Buy Now, Pay Later (BNPL) to your checkout page, you may want to read about the benefits. There are so many advantages – particularly for merchants, and there are plenty of benefits for consumers too. In fact, if you do offer Buy Now, Pay Later as one of your payment options, you should enjoy an uplift in sales. Two thirds of online retailers offering BNPL in the UK have reported an uplift following adding it to their checkout page. We’ll tell you more about the benefits of BNPL for merchants in this piece.
What is Buy Now, Pay Later?
Before we move on, it might be useful to quickly recap on this payment option. Still relatively new, it’s gaining in traction and it’s expected to roll out to more and more e-commerce stores over time and 360 million retailers globally accept it as a form of payment for goods with that number expected to rise to 900 million by 2027. Those statistics alone prove that it’s worth adding it to your shopping cart, but there are numerous other reasons why, which we’ll go into here.
A Short-Term Loan
BNPL is a form of short-term financing that is different to a credit card. The loan is paid off in a series of instalments, usually over weeks or months until the total amount is paid off. Most BNPL providers don’t charge interest (unless payments are late or fail entirely), so for consumers, there’s a lot that makes it appealing.
- When the consumer reaches the checkout page of a website offering BNPL as one of its payment options, they select from the list available (if the merchant offers more than one provider). Examples of providers include Klarna, ClearPay, Splitit, PayPal Pay in Four amongst others.
- Following selection of BNPL, the consumer fills in a very short application form which is subject to a soft credit check (and doesn’t harm the consumer’s credit score – another bonus).
- Once accepted, the consumer is redirected back to the checkout page and pays the first instalment triggering the sale.
- Further instalments are collected at weekly or monthly intervals, depending on the initial agreement and the BNPL provider collects these on your behalf.
So that’s how it works – but what about the benefits?
Buy Now, Pay Later – Benefits for Merchants
- Higher Sales Conversions
We know that ecommerce retailers enjoy on average 2.1% higher conversion rates when Buy Now, Pay Later is an option on their checkout page. Of course, if you’re not offering BNPL, then your customers could choose to shop elsewhere and enjoy the perks of spreading the cost of their purchase.
2. Bigger Basket Values
Statistics also state that online retailers offering BNPL see bigger basket values and that’s because consumers are more likely to buy larger value goods when they have the option to spread the cost. BNPL gives consumers flexibility of trying their goods first, without paying in full – and that’s a reason why ecommerce stores are seeing bigger basket values.
3. Better Customer Payment Journey
Customers today are looking for convenience and they like to feel they have payment options. By adding Buy Now, Pay Later to your shopping basket page, you give them the flexibility they want and control over how they pay. All that leads to a better online shopping experience – and repeat custom because if a customer enjoys their experience on your website, they’re more likely to return.
4. BNPL Is Popular Amongst Gen Z and Millennials
If your market is Gen Z and/or Millennials then offering BNPL will make a difference because statistics show that ¾ of Buy Now, Pay Later users are from these demographics. BNPL allows both these markets to pay for goods over time – which is what they’re looking for – without racking up large credit card bills (as long as they understand how to manage their finances of course!). More than 45% of BNPL customers are likely to use BNPL to finance a large purchase that they wouldn’t normally be able to afford in one lump sum too – and that’s another attractive feature of Buy Now, Pay Later.
5. Full Payment Up Front
You might think that when you add BNPL to your cart, you won’t get paid in full for your customers’ goods when they choose the payment option. However, the merchant receives full payment up-front, and the payment provider receives the instalment payments – so you do get paid immediately upon order placement.
For online retailers wishing to expand their market share and increase basket value then BNPL is the obvious additional payment choice to add to shopping baskets. As more retailers look to include Buy Now, Pay Later to their buyers’ shopping journey – it would be wise to include it on your checkout page too, rather than lose out to your competitors.