With the penetration of Buy Now, Pay Later services rising significantly year on year, more Australian businesses need to offer the payment methods that will please their customers
Growing mistrust of credit cards and big banks, increasing awareness of consumer debt perils and the added strain of economic downturns, have created ideal conditions for BNPL services to thrive. In a September 2020 survey conducted by Zip, a leading Buy Now Pay Later provider, approximately 3 million Australians had used a BNPL service in the past year.
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Some shoppers are simply looking for more transparent ways to manage their finances instead of hard-to-decipher credit cards. BNPL offers payment plans that are simpler to understand and potentially easier to pay back.
Approved BNPL customers can defer payments at checkout whether they’re shopping online or in-store. The BNPL provider pays the merchant in full (minus a service fee), and the customer pays the provider in agreed-upon instalments.
Unlike credit cards, some BNPL providers don’t charge users with explicit interest and penalties. Some providers charge interest only for missed or late payments. A user survey commissioned by Zip proved their interest-free period as one of the top two reasons why consumers choose their service.
With shoppers careful to manage their cash flow, merchants are looking to lure consumers back to stores and make them comfortable with making larger purchases.
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For merchants, accepting BNPL at the checkout is similar to accepting credit cards. The merchant fees for BNPL transactions are a small price for many businesses to obtain new customers. Plus, by offering shoppers more time to pay, merchants can use BNPL to reduce sticker shock and increase their conversions.
Since it’s inception, Zip has grown to partner with over 2,000 leading online and offline retailers across the fashion, beauty, homeware, travel and lifestyle segments. This represents a ready-made opportunity for retailers who want to expand their market reach.
Ultimately, Zip aims to leverage the benefits of Buy Now Pay Later to help retailers reach and engage a new generation of tech-savvy consumers by offering them a better shopping and payment experience.