BNPL is taking the world by storm. And it’s no surprise! Though not a novelty, the Buy Now Pay Later method has seen more prominent implementation in recent years, as it was discovered to help significantly with conversions.
Not only that, but the newer generations, warier of rising debt and more careful with their money, have found that the BNLP method is much more preferable to taking out loans and making large purchases.
BNPL is becoming the preferred purchasing method quickly, as 55% of buyers opt for it rather than paying for a large order or paying multiple times for multiple smaller ones.
With that said, let’s explore BNPL a bit. This article will show you some of the benefits of BNPL and why you should implement it in your business, and how this method can help your business grow in the future.
What Is It and How Does It Work?
Okay, let’s start with the basics – what is BNPL, and how does it work?
Buy Now Pay Later method is a simple, multi-installment payment service. Instead of your customers paying in bulk for their order, they can now pay a certain percentage now and pay off the rest in a predetermined set of installments.
The best part about this payment method is that the buyer incurs no additional costs. There are no interests in the purchase – you pay what is owed, and that’s it. This is the chief reason this method is preferred over any other.
But, what’s even better, is that the business using this method doesn’t have to wait for the customer to pay off their installments to get the full payment either! See, the way BNPL works is that you have a specialized BNPL agency set up the payment plan, and they pay you out in full when a customer makes a purchase.
However, be aware: agencies take a small percentage of the order as a fee as the customer pays their installments and a flat fee for implementing their service, which means you run the risk of bumping up your prices!
Benefits of BNPL
Now that we know how this payment method works, let’s discuss its benefits? What makes it so popular? What marks it as a positive for your business? Why should you bother implementing it?
Let’s approach these questions from this angle: did you know consumers abandon 67% of their online shopping carts? That’s two-thirds of all your shoppers failing to go through with their purchase! Further yet, almost half of them say the exact pricing made them turn away from completing their purchase.
That is a somewhat defeating statistic for a business owner. Having that many people opt out of making a purchase means you’re losing many potential customers. And that’s where BNPL steps in.
You see, BNPL is good at removing people’s inhibitions. Being able to buy things and pay in several installments without interest allows consumers to plan and make a larger, riskier purchase. And this, in turn, drives your conversion rates up!
Yes, conversion rate! As most eCommerce website development services tell you, this is the most important statistic you should worry about. If your business can convert visitors into customers, you will definitely see a massive increase in your revenue, and that makes BNPL very much worth the investment.
Besides driving up your conversion rates, BNPL also drives up your Average Order Values (AOVs). Being able to spread the cost of their purchase, most people won’t be too afraid to order more and pay for more products at once.
Most people shop in bulk during holidays when the bonuses roll in, and BNPL provides them with an excellent way to reduce that pressure. As for sporadic shoppers, it allows them to spread their expenses thinner and plan further ahead.
Now that we’ve seen how beneficial BNPL can be let’s dial it back a little and see some of the considerations you need to make before implementing this payment method.
As we have said, implementing BNPL means you have to go through an agency, and they take a cut of your sales. This is the first consideration you need to make – whether the extra fees and, thus, increased cost of the product/service you’re providing is worth it. Maybe your customers won’t appreciate you becoming more expensive after all.
Secondly, you must consider the service provider themselves. Which agency do you need? What kinds of items/services do they cover? Certain agencies can do small products and low prices, but others only do larger orders because it’s just not profitable for them.
Tied in with this is the question: how are the payment installments? Will, your customers like them? Is it beneficial for them in the long run?
Unfavorable installments are just detrimental to your business as high prices, so make sure the agency you’re employing has the best interest of your customers in mind and not just thinking of themselves.
Last but not least in the slightest, consider any potential security risks. BNPL requires your agency to obtain certain credit card info from your customers. Only cooperate with trusted and reputable agencies to prevent any credit card info theft that would put you into an ungodly bind!
And, with that, it is time we wrap up our little article on Buy Now, Pay Later as a payment method. As you’ve seen, it’s getting quite popular, and for an excellent reason.
It’s convenient for the customer, suitable for the business, and profitable for the agency, so why not use it?
Naturally, some considerations need to be made. Still, if you find your business struggling with obtaining new customers, perhaps it is time you took a look at your pricing and how you can make it more accessible to a broader audience. And what better way to do it than through BNPL.
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Travis Dillard is a business consultant and an organizational psychologist based in Arlington, Texas. Passionate about marketing, social networks, and business in general. In his spare time, he writes a lot about new business strategies and digital marketing for FindDigitalAgency.