Evolving technologies have changed many aspects of consumers’ lives. For example, people are increasingly purchasing products via eCommerce rather than going to a store or market.
This is due to technological advances, which allow transactions to happen easier and faster when compared with offline retail outlets. Now there is a new growing trend in the ecommerce space known as Buy Now, Pay Later (BNPL). This significant trend has been on the rise due to its flexibility and interest-free nature.
The size of the U.S. BNPL lending market was worth around a few billion U.S. dollars in 2019 but is estimated to grow by 1,200 percent by 2024.
Many startups and sites such as Amazon and Flipkart offer Buy Now, Pay Later benefits to their consumers. Specifically speaking, Millennials prefer making purchases through BNPL because they find it more convenient to make payments.
To validate my point, let me put you the stat that shows there are approx 360 million BNPL users worldwide. This way, BNPL is a growing opportunity for businesses that has huge potential to allure more customers, boost sales and take the business to the next level.
So, in this blog, we will dig deeper into what BNPL is, how it benefits business owners, and how it can help you grow your business.
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What is BNPL, And Why is it so Appealing?
BNPL offers short-term financing where consumers can purchase items today and pay them back with no interest in the future. To put it simply, with BNPL, the consumer can make a purchase and opt to pay for this purchase at a later date (at no extra charge). It aims to better the consumer experience to enable frictionless commerce.
For example, if a customer buys items that cost a total of $500, they get to pay $125 at checkout, receive the products immediately and pay off the rest in interest-free installments every two weeks for six weeks. That’s why it has attracted lots of customers to use the service.
Crucial Factors Giving a Rise in the ‘Buy Now, Pay Later
Several factors have given rise to BNPL. Let’s look at them.
The Covid-19 Pandemic and Change in Consumption Patterns
Since we have witnessed a corona pandemic, we know there were major changes observed in the global economy due to it. The such change led to a decrease in purchasing power for many people who could only buy necessities instead of other items they wanted.
However, through this adversity, BNPL helped several people purchase the item now and pay the bills later. Find a top mobile app development company in india for your startps.
Demographics-Related Purchasing Power
In today’s business landscape, you will find that a large number of BNPL purchasers are Millennials and next-generation people. Younger generations are expected to dominate the future of this product. Using these modes of payment is easy for tech-savvy people, so they’re much more common among them than they were in previous generations.
Not only that, but it helps make purchases without incurring debt, which benefits recent college graduates who don’t yet have much money.
The exponential growth of the eCommerce industry has been noted as one of the major contributors to the rise of BNPL and its development shortly. It is crucial for you to identify what methods work best for your company and what tactics are most successful so that you can stay ahead in this growing industry.
One significant way you can do this is by providing payment options that are both affordable and convenient for customers – which means more sales and a higher conversion rate.
In other words, BNPL is an efficient method when it comes to attracting potential customers or retaining them when they already exist in your current customer base.
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Why Consumers Like Buy Now, Pay Later?
There are several reasons why consumers like to use the Buy Now Pay Later option. Here is why?
Buy now, pay later is a popular option for consumers who want to buy something but don’t have the money upfront. This type of payment plan usually has no interest fees and doesn’t require a credit check.
Most people like this payment plan because it allows them to buy what they want without having to pay any interest fees or be required to get a loan from a bank.
2. Quick Processing
The convenience of buying now and paying later is one reason why consumers like it. There are no long forms to fill out, and the process is quick. You also don’t need a credit check or good credit to get approved.
Buy now, pay later is a type of credit that allows you to make a purchase today and then make monthly payments over several months. These loans are often seen as more advantageous to consumers because they offer more flexibility than other loans.
4. Increased Purchasing Power
Buy now, pay later is a great option for consumers because it offers increased purchasing power. This flexibility lets you buy now and then pay later when you are able to afford the cost. You don’t have to worry about being denied or not qualifying for financing like other credit cards may require. It also allows you to get things that you may not have been able to get before with other types of financing options. And, while traditional credit cards offer rates as high as 29%, there are some providers of Buy now, pay later services who offer interest rates as low as 0%.
5. Builds Trust
With Buy Now, Pay Later, consumers are not required to pay for the purchase immediately. This gives them time to make sure the purchase is right for them and that they can afford it. It also builds trust between the consumer and retailer because no credit check or up-front payment is required.
The lack of risk means that more people will be willing to buy from a business they may not have done so before if they offer this option.
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How BNPL Options Benefits Retailers
1. Attracts New Customers
BNPL options can help attract new customers as well. When a customer sees that a retailer is offering an extended return policy, they are more likely to purchase from that store because they feel like their purchase will be protected if something goes wrong with it.
So, not only does BNPL help retailers attract new customers, but it also helps them retain old ones.
2. Better Customer Experience
Retailers looking to increase customer experience and reduce costs need to look no further than BNPL options. The great thing about these plans is that they are flexible, affordable, and easy to use.
With these options, retailers can provide their customers with a variety of payment types which will appeal to a broader audience and improve chances of conversion. In addition, this option also helps retailers address issues like fraud and chargebacks while reducing operational costs.
3. Decreases the Chances of Cart Abandonment
More than 60% of shoppers who start an online shopping cart and don’t finish it will never revisit that site. This is called cart abandonment, and it’s costing retailers billions in lost sales every year.
In response to this, businesses are looking for ways to make it a lot easier for people to complete their purchases before they abandon their carts. This is where BNPL comes into play, enabling businesses to reach wider audiences.
Retailers can set up a Buy Now button on their sites to enable customers to make purchases without creating accounts or entering payment information. The customer just has to click Check Out and then submit their order. It’s as easy as one-two-three!
4. Boosts Sales
When retailers offer various payment options like credit cards, debit cards, electronic checks, and cash, shoppers have more flexibility in deciding how to pay for their purchases.
They may not have enough money on their credit or debit card at checkout, but they might need to pay later by e-check or by cash. In this way, retailers offer shoppers an increased level of convenience that has been shown to increase sales.
5. Higher Customer Lifetime Value (LTV)
One of the significant challenges retailers face is keeping customers coming back for more. With an average return rate of 20% (and some as high as 60%), retailers need a way to bring in new customers and ensure they have a loyal customer base. By using BNP options, retailers can easily gain higher customer lifetime value.
Higher customer lifetime value (LTV) has many benefits for merchants. BNPL attracts new Millennials and Gen Z customers who visit more often and spend more money than older shoppers.
Since a positive shopping experience is vital to retaining customers, these good experiences mean they’ll come back again and again.
Also Read– How to Increase Customer Life Time Value by Developing an App?
As the ecommerce landscape continues to change with the growing demand of customer needs, businesses need to pay attention to enhancing the customer experience.
You may hire a leading fintech app development company like “Quytech” to get your job done easily and with no hassle.
BNPL has the potential to help you provide your customers with unique experiences and likewise boost sales, reduce the chances of card abandonment, allure new customers, and build trust with customers.
This way, you can integrate the BNPL option into your ecommerce store and take your business to the next along with building a loyal customer base.
If you’ve built your ecommerce tech stack to feature a modern payment processing software that allows digital payments, it won’t be too hard to integrate a BNPL service.
To know more about what a Quytech can do to transform your business, contact them at given link.