How BNPL is Transforming the Shopping Journey and Retailers’ Success

Buy now, pay later services are increasingly becoming popular. As a result, there has been an immense growth of BNPL services amongst businesses such as E-commerce, where customer experience is vital for them. We have seen a gradual increase in the Buy now, pay later feature while having a transaction. These services experienced wide growth around the globe. As a result, the buy now, pay later is changing how people shop and impacting retailers’ business.

Buy now, pay later service is a way of short-term financing that allows consumers to purchase an item and pay for it later.

There is usually no additional charge for the customer- instead, the store that offers BNPL as a payment option pays a fee to the BNPL service provider.

Businesses use BNPL, especially E-commerce, to increase their conversion rates and average order value and grab the attention of new customers. Such services also act as an advantage for the customers. It allows customers to finance their purchases and pay them back in fixed installments.

For example, if a customer purchases $100, he will pay back in no-interest installments of $25. These payment methods give flexibility to the customers to finance large purchases.

How Do BNPL Services Work?

Buy now, and pay later are typically presented as an option in the payment flow, with credit cards and other payment options. This makes it convenient and easy for the customers to use.

When customers make a purchase, they choose a buy now, pay later service in the payment form, redirecting them to the provider’s site or app. Customers can choose the repayment plan terms- selecting whether to go with weekly or monthly installments and then completing the purchase.

After a customer completes a purchase, the business receives the full payment minus any applicable fees. The customers later pay their installments to the BNPL services provider. In most cases, if the customer pays on time, there is no interest or additional fee.

The BNPL services require the users to set up an account and provide payment information. Then, when it’s time to pay, the BNPL service will automatically charge the customer’s payment method for the agreed-upon amount.

How Does Using the BNPL Option Benefit Retailers?

Offering your customers a frictionless checkout experience is key to keeping them happy and loyal- especially if your business is focused on E-commerce growth.

In addition, users usually have a customizable payment experience that allows them to choose how to make a payment. Buy now, pay later payment methods offers flexibility, and convenience and increase the conversion rate or average order value.

Below we have listed some benefits of BNPL services;

✔️ Secure Up-front Payments

Businesses will receive the total transaction amount upfront immediately- regardless of whether or not the customer successfully pays their installments. This means that the buy now, pay later provider will take on all customer risk, protecting your business from fraud. In addition, the BNPL service provider handles the risk and associated costs if fraud-related disputes arise.

✔️ Attract New Customers

Offering a variety of payment methods allows you to create a relevant and convenient payment experience that attracts new customers. BNPL options are popular amongst customers who don’t have credit cards and want to opt for large purchases.

In addition, it established marketing channels, like a shop directory and email marketing, which could provide opportunities for you to connect to new customers.

✔️ Better Customer Experience

BNPL payment services are a great way for customers to get financing quickly and easily. With most providers, there is no additional application fee, and customers can complete the payment process in just a few clicks. However, even the repayment plans and terms are straightforward. In addition, the payment process for returning customers is even easier.

✔️ Increase in Conversion Rate

Customers usually make payments when they can pay for the item later. BNPL services help reduce any burden of payments from the users. It’s less intimidating to make no-interest installments which drives customers to buy more. However, with BNPL services, you can always experience high conversion rates.

✔️ Boost Average Order Value

As we discussed earlier, BNPL services are convenient for customers who want to make large purchases but can’t make full up-front payments. With such services, businesses offer their customers to pay for their purchases in installments, making them more affordable. This encourages the customers to purchase more items since the payments are not all at once.

Choose the Right BNPL Partner for Your E-commerce Business

Selecting the most appropriate buy now, pay later provider depends on the types of products you sell, the price, and your customer base. Here are a few aspects you should consider when evaluating providers,

🔶 Payment Terms

Depending on your business type, the average order value will be different. Businesses like E-commerce usually have a higher average order value. As a result, such businesses can always go for buy now, pay later providers that offer payment or repayment plans over a longer period. It can be either monthly installments over six months or yearly.

It’s important to pay attention to payment terms offered by the BNPL provider. This includes the length of the repayment period and the frequency of payments.

🔶 Credit Limits

The credit limit for each customer will differ based on their purchase history, credit score, and repayment history. Therefore, some service providers have minimum and maximum credit limits.

Make sure you consider your average order value when choosing a provider to give customers enough credit to make a purchase successfully.

🔶 Customer Location

When deciding which markets you’d like to offer BNPL service, consider locating where your customers are. This may mean offering more than one BNPL provider to ensure maximum geographical coverage. You can also choose the BNPL service provider based on its popularity in that region.

How Implementing BNPL can Help Your Customer?

Buy now, pay later can offer various benefits for customers. We have listed some of the advantages below;

⬆️ Increased Purchasing Power: BNPL allows a customer to make purchases they are not able to afford upfront. Such benefits can empower the customer to purchase from E-commerce businesses.

⬆️ Flexibility: With BNPL, the users offer flexibility in repayment options, allowing customers to choose the repayment schedules that can be suitable for them. The users can easily manage their finances and avoid late fees or penalties.

⬆️ No Interest: Many BNPL services or providers offer interest-free repayment plans, which make the customers make easier purchases and have no burdens of extra interest on the purchase.

⬆️ Convenience: BNPL services often offer quick and easy transactions, making it convenient for customers even during emergencies, whether they are online or in-store payments.

⬆️ Improved Credit Scores: Customer can easily increase their credit scores through the BNPL service by showing the payment history of on-time payments.

How can Mindbowser Help?

Mindbowser has offered multiple payment services using apps like Stripe to E-commerce companies. With the help of integrations, we make it possible to accept the buy now, pay later option. This makes it easier for E-commerce businesses to operate globally and provide customers with more payment options.

Related Read: Learn All About How Stripe Payment Works?

We offer services like;

🤝 Seamless Integration

We provide services with built-in payment support, allowing you to create a better customer payment experience.

Various payment API services like Stripe makes it easy to provide multiple payment options through a single integration. This means you can have a unified integration that involves minimal development time and is easy to manage, no matter which platform you choose to implement.

With various integration tools, E-commerce businesses can easily select payment methods by implementing a single line of code to automatically display the right payment methods and language based on IP and other signals.

The BNPL services allow your customers to pay you in their preferred payment method, whether it’s a credit card, debit card, or another type of payment. With our service handling payments, you can rest assured that everything is being taken care of while making things easier for both you and your valued customers.

🤝 No Desk Work

You can start accepting buy now, pay later options with Mindbowser in lesser time. There is no additional application, onboarding, or underwriting process required. You can find out your eligibility for buy now, pay later service by talking to our expert. Our expert team will help you find the right choice and provide the integrations that suit you.

🤝 Monitoring and Reporting

With Mindbowser, you can streamline your operational processes and reduce complexity by applying proper services. This includes “buy now, pay later” benefits, which makes reconciling your finances much easier.

We standardize the processes such as fulfillment, customer support, and refunds, so you can save time and focus on other areas of your business. Our experts monitor your activities and provide reporting of all the activities to help you make decisions for your business. Many E-commerce businesses need to have data for their customers and their actions; brief monitoring can help you track customer behavior toward payment methods and other engagements.

Reasons Why US Consumers Use BNPL Services

The Consumer Financial Protection Bureau (CFPB) recently released revealed staggering growth of Buy Now Pay Later loans in the U.S. from 2019 to 2021. The top five lenders saw an exceptional increase of 970% in the number of BNPL loans originated during the period. The statistics highlight a significant shift towards alternative payment options and indicate how increasingly popular BNPL is becoming popular as more consumers opt for this convenient and flexible payment method when purchasing luxury goods and services.

The age gap between 18-34 years has made a significant portion of BNPL users accounting for around 16% of the increase. According to a survey conducted the majority of BNPL users are US-based consumers. Diving into specifics, there are currently 79 million BNPL users located within the US, which is a significant increase of 56.1% from the year 2022.

We have discovered a few reasons why US consumers are widely using BNPL services. Paying interest on your credit cards can be overwhelming. Consumers are opting for BNPL services to avoid these credit card interests and to achieve the ability to borrow without a credit check. Another reason is to make large purchases that otherwise wouldn’t fit in the consumer’s budget.