The pandemic has made online shopping popular and deteriorated the purchasing power of customers. Under such circumstances, features like buy now and pay later (BNPL) became a blessing. Online shopping websites have been quick to offer this new way of payment to their customers. It is being seen as a futuristic payment process. But what do the e-commerce giants get through it? What is BNPL, and how does it help the E-commerce industry?
Buy Now Pay Later: A revolution of its kind.
Also termed ‘Point of Sale loans,’ BNPL is a method that allows shoppers to pay at a later date. It is a consumer-friendly alternative to the old-school layaway method, where stores let consumers pay off their debts in installments. If you buy now and pay later, you don’t have to clear the entire sum before accessing your order. You can choose a pocket-friendly financing plan and pay it in installments.
BNPL: How does it work, and why is it popular?
To put it simply, you buy it now and pay it at a later date. You enter into a sort of contract with the seller, like in the case of a conventional loan. You agree to pay the principal, the interest, and the applicable taxes. It is pretty similar to when you choose to buy a laptop on EMI. The late and prepayment fees are subjective and depend on the vendor offering to buy now and pay later.
Because of the coronavirus, it is becoming increasingly popular. Research by Worldpay says that global e-commerce transactions stood at $4.6 trillion last year, up by 19% from 2019. Buy now and pay later accounted for 2.1% ($97 Billion) of such transactions, a figure expected to double up by 2024.
What good does it hold for the e-commerce industry?
Imagine you are an e-commerce business, Buy now and pay later offers substantial advantages. Some of the lagniappes for your e-commerce businesses are highlighted below:
- BNPL has the potential to increase your sales
This is quite simple when you allow ease of payment. Customers are more likely to purchase from you. With buy now and pay later, customers don’t even need to have the money to spend it. It requires the confidence that they’ll be able to repay in the said tenure. It would convince customers to buy a pricier item they otherwise wouldn’t. By adding BNPL to the list of accepted payments, e-commerce portals attract new customers too.
- BNPL enhances customer experience
Customers will always love it when they are offered multiple payment options. Adding BNPL to your business would leave an impression that your business is evolving with time. With buy now and pay later, your customers will not shy away if they raise an expensive bill. Also, there is no need to enter credit card credentials or swipe your card. The customers only need to log in through their BNPL host. This would ease the checkout process and leave your customers satisfied.
- BNPL gives an edge over competitors.
Innovations in business always make it attractive and different. Having to buy now pay later while your competitors are slow to adapt can be a game-changer for your business.
- BNPL builds trust, and trust builds business
While it may sound peculiar, customers can buy your products to test them. They don’t have to pay the entire price, and you can get honest feedback. If they like it, they will keep it and spend the rest of it over time. If it ends up the opposite, your customers will return it without any queries for a refund. This builds a trust-based relationship, and your customers become more candid with you.
E-commerce is the future because conventional supermarkets stay plagued by the needs of social distancing. Buy now and pay later becomes the need of the hour when consumers are recuperating from the disasters of COVID. You are building a customer-centric business by switching to part payments instead of complete checkouts upfront. This leaves an impression that your venture is consumer-friendly.