Banking on Flexibility with Buy Now, Pay Later
If becoming a digital store felt overwhelming, what we’re about to discuss may make you sweat. Don’t. It’s an up-and-coming topic developing in the changing world of ecommerce merchandising. It addresses how to collect on what you sell, and how to make it easier for your customers to buy.
Dubbed “BNPL” for short, the concept of Buy Now; Pay Later offers payment plans for goods–something that was once only a reality for big retailers offered through proprietary credit cards, or by accepting bank cards. That’s still a way to go, but what if you could ease the pain of customers who really want what you have, but are constrained by a temporary financial shortfall?
In the era of a global pandemic, creative financing has taken on various forms; experts believe the shutdowns have advanced ecommerce developments by up to five years. As shopping online has exploded, strategic agreements with underwriters mean even small businesses can entice buyers with offers to pay in installments.
Flexible payment methods are attractive to nearly 60 percent of consumers who purchase online. Those numbers might incentivize your decision to explore the possibilities. Though not without limitations, it’s at very least a marketing tactic that accommodates tough times.
Offering payment flexibility requires a direct integration through your point-of-sale system, and that initial step is big. Some players providing this service include Affirm, Afterpay, Klarna, and Quadpay. PayPal, perhaps the most prolific online payment platform, announced in August that it would begin a launch.
One study analyzed data of BNPL programs over a three-month period, reviewing almost a half-million transactions across more than 300 retailers. They included the above five platforms. Here’s what they found:
PayPal represented a vast majority of transactions, totaling 65 percent.
Afterpay ranked second with 10 percent.
Affirm gobbled up 6 percent of online BNPLS
Klama represented 5 percent, and
QuadPay lagged last with 2 percent.
The allure of this flexible payment concept should be obvious. Like other marketing strategies used to gain customers and sales, these flex-pay plans succeed in an almost incidental branding for your biz. Customers already warming up to your site will remember the ease of splitting up payments. It’s no surprise that TV-based home shopping networks have such a loyal following – not only have they created leisurely and pleasant ways to shop over the past four decades, they’ve also built captive audiences through their rollout of flex-pay plans that began in the 1990s.
The upside is documented through impressive statistics. Average order values increase by up to 45 percent. An increase in conversions of 35 percent has been achieved through this creative financing. And returns decrease to just over 5 percent, an impressive number.
Some options you might offer for split-pay transactions include a pay-in-full with no interest for 30 days; pay in the short term with multiple installments and no interest; pay in the short term with no interest but a slight price difference; pay in the intermediate term with several installments and no price adjustment, but a low interest that accrues.
Find out more about this tempting way to increase sales and develop a comprehensive customer loyalty at Practical Ecommerce. It covers the nuts and bolts of merchant costs, expectations, and scenarios that may make the flex-pay system more or less palatable for your business.