Ever hesitate to click “purchase” because the total price tag gives you pause? Buy Now, Pay Later (BNPL) is revolutionising e-commerce by offering a solution to that dilemma. This innovative payment model allows you to split your purchase into manageable instalments, making it easier to afford that dream item.
Let’s discover more.
PayPal, Amazon, or Klarna, the giants in the industry, have adopted BNPL, the much-talked-about payment model. It makes us believe that the very model is the future of e-commerce.
What is BNPL, and why is it gaining momentum from e-commerce stores as well as customers?
Buy now, pay later (BNPL) is a payment model where shoppers are allowed to make a purchase and pay for it later. The payment can either be done in one transaction or by way of instalments. The best part about the payment model is that it goes interest-free most of the time.
The market size of BNPL was around €80 billion in 2023, and it is estimated that by 2023, the figure is likely to rise to €3.5 trillion.
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Top Benefits of the BNPL Payment Model
For Online Retailers
Online retainers can take advantage of BNPL, and here are the benefits they can avail of:
- Higher conversion rates
- You can attract more customers.
- Higher average order value
- You can offer an enhanced customer experience.
- More flexibility in selling goods and services.
Retailers want shoppers to pay at the point of purchase, but many times, retailers do not have sufficient funds to pay for the products or services they need. BNPL allows flexibility, breaks a big into payment into bite-sized, affordable chunks, and hence increases conversion rates. Overall, BNPL offers a great customer experience.
Using BNPL services, retailers can sell their high-value items without facing hiccups from customers because there is an option to spread out a large payment over weeks or even months. A large number of retailers are using BNPL as a marketing tool to increase their conversion and average order value. Suggesting the BNPL payment method in the initial buying cycle increases the likelihood of shopping.
For Shoppers
BNPL offers everything a shopper wants. He or she can purchase whatever they want by paying a minimum price at the point of purchase and dividing the remaining amount in instalments over the next few weeks. Here are the benefits shoppers can avail of:
- Flexible shopping
- Minimum or zero interest rates
- They can think about purchasing a high-value item.
BNPL is gaining popularity among shoppers due to many reasons. And one of the significant advantages of BNPL for shoppers is the flexibility of payments. There is no need for the shoppers to pay the entire amount at the point of purchase, but they can choose to pay in instalments. Additionally, some retailers tailor the payment cycle as per the buyer’s preferences.
The Uprising of BNPL: A Shift in Consumer Behaviour
We have witnessed how consumer preferences have changed over the years. Consumers are looking for better and more flexible payment options, so no wonder they are inclined towards using BNPL. The system helps consumers manage their finances without compromising major purchases.
“Flexible payment models like BNPL not only provide a solution to many consumers’ liquidity problems but also promote responsible purchasing behaviour.”
How does BNPL redefine e-commerce?
Consumers are always in need of flexible payment options. While BNPL draws attention to the existing customer segments, it lets you tap into some untouched customer regions. For example, Gen-Z, who do not yet have access to funds or credit lines, find BNPL an attractive option. Accessibility becomes an invaluable tool for online merchants who are looking forward to building a loyal customer base.
BNPL is a lucrative payment option for retailers and consumers alike; however, the integration hinges on e-commerce companies. Companies should follow a few steps that help in the successful implementation of BNPL platforms:
- Selection of technology: Choose a BNPL platform that is ideal for your business model and is easy to integrate into your current marketing ecosystem.
- Educate customers: As you invest in a BNPL platform, it is also essential to inform your customers about the flexible payment options you are offering.
- Security and Data Protection: As you integrate a new payment system, you should ensure that all the transactions comply with current data protection laws and convince your customers that their data is handled securely.
Final Thoughts: Shaping the Future of E-Commerce
Buy Now, Pay Later (BNPL) is undoubtedly shaping the future of e-commerce by offering a convenient and flexible payment option for both consumers and retailers. While it fosters increased sales and an improved customer experience, it’s crucial to acknowledge the potential for impulsive buying and overspending. Responsible use of BNPL, coupled with clear communication and financial literacy education, can ensure a sustainable and beneficial future for this innovative payment model.
