Given the affinity and demand for online services in our digitalized world, as an online business owner, you can wield numerous advantages and empower over 1.8 billion online shoppers globally to access your services from the comfort of their homes. That said, you would also have to compete for a market share with over 15 million other e-commerce platforms. For you to come out on top in the battle, there are some weapons you should have in your arsenal, without a doubt. One of these assets is BNPL. What is BNPL, and why is it an absolute must-have for your online business platform? This piece is geared to provide you with just that and help you get going great guns.
BNPL – How It Works
Buy Now, Pay Later, otherwise known as BNPL, is a financing option that allows customers to pay for products in convenient installments rather than a lump sum payment. Such short-term financing plans are available as a check-out option for products within a specific price range and break that price into bits payable over a period of time, usually over a few months.
If you are an online store owner interested in incorporating BNPL into your business, the best way to achieve short time-to-market is to partner with a third-party BNPL provider and get out-of-the-box solutions. Note that although some BNPL loans come with interest charges, most do not. Usually, third-party companies charge late fees if the customer defaults on payment; some also agree with business owners to charge a commission over every sale conducted through their payment package.
For instance, A runs an online shoe store and liaises with B to introduce a BNPL option to the store’s online platform. The agreement is closed, with both parties settling on B receiving 10% of every BNPL sale. Then we have C who buys a pair of shoes worth $200 and proceeds to check-out. While exploring different payment options, C comes across the option to pay in installments, with an initial upfront payment. Note that the installments would be billed to the customer’s credit card or another preferred payment method at the agreed periods until they offset the payment completely. For B, that means a profit of $20 on that sale without charging C extra. What A gets, on the other hand, is a satisfied customer, which can further increase sales and brand loyalty. But now try to visualize it! A, B, and C are not just letters but real people with real needs, real businesses with outstanding goods and services and real fintech companies that are here to revolutionize the financial world we know – real like you and your customers!
Why You Need BNPL for Your Online Store
As an online store owner, you might wonder whether BNPL services are worth the cost. It turns out they are. Just look at some of them:
- Customer Conversion: As an online store owner, lead generation is one of the most critical aspects of your business. What could be better than having potential customers coming across and checking out your store? The answer would be getting those potential customers to make actual purchases while visiting. BNPL is a perfect avenue to boost conversion rates. According to a survey by SimilarWeb, merchants that offer a BNPL payment option at check-out usually record a 2.1% increase in conversion rates over those that do not. As you already have superb products on offer, the sudden allure of BNPL could be just the push your leads need to make that purchase.
- Higher Sale Value: Incorporating BNPL into your online platform could increase not only your sales but average sales value. According to The Ascent, 45% of customers who opt for BNPL utilize it to make purchases that normally exceed their budget. Without BNPL, budget-conscious customers would be skeptical about making purchases of high value, especially when the purse is tight. However, spreading interest-free payments over a comfortable time frame allows customers to spend the extra dollar without worry. In addition, C+R Research crunched numbers showing that a whopping 59% of BNPL users admitted to making a spontaneous purchase. This increases the number of purchases recorded and the overall revenue raked in through the sales process.
- Improved Customer Satisfaction: Customer satisfaction is a core function of any business. The more satisfied your customers are with your services, the more they want to return to you. BNPL allows you to optimize your customers’ satisfaction levels. Users have different reasons for using BNPL, including budget constraints, avoiding credit cards and their technicalities, and data security, so offering flexible payment options accommodates different preferences and improves customer satisfaction and loyalty. Considering the fact that 55.8% of the demographic uses BNPL as a preferred payment option, according to The Ascent, you have room to win a lot of loyalty for your business.
- Greater Appeal: BNPL helps garner a lot of appeal for your business, especially among the less financially buoyant part of the demographic. With the realization that they could enjoy all the benefits of BNPL without any extra costs, there is no doubt that customers would find your business much more appealing.
Ultimately, BNPL adoption is growing at a fast pace. In fact, BNPL usage grew a jaw-dropping 85% between 2020 and 2021 and is showing no signs of slowing down in the years to come. At this rate, it is only a matter of when you should join the bandwagon, not if. And the takeaway from this post is that the right time is now. With Tarya Fintech BNPL, you can help your customers buy now and pay later – so do not hesitate to integrate now and enjoy all the benefits… also now.