Change is inevitable. But the rate of change in the eCommerce industry is increasing day by day. Every change has its own impact on the industry’s progress. With its mobile first payment mode, buy now, pay later, a traditional payment method with great rebranding has become one such trend. In this article, let’s explore how the buy now, pay later payment option is impacting the eCommerce world.
What is Buy Now, Pay Later?
Buy now, pay later speaks for itself. It is a payment method that allows customers to purchase what they want and pay for it later, slowly, in installments. This is not something completely new. There are many that have been similar to this payment method over the years. With minor changes and greater rebranding, buy now, pay later has become the popular payment option in these pandemic times. Buy now, pay later has given the customers the leeway that became necessary in these uncertain times. It is a deal-breaker for budget-conscious customers to buy expensive items, ensuring retailers certainty in their product sales.
How does it work?
A popular payment method like buy now, pay later could not have gained popularity if it were too complex for the customer to pay and for the retailer to receive the money for the sold product. So, let’s see how buy now, pay later works.
Firstly, the customer decides to purchase a product. During the payment, she sees if the buy now, pay later option with 0% APR is available to make payments in installments, which is much more comfortable for her. With a 0% APR offer, the customer doesn’t need to pay interest if the BNPL gets a green signal. A link is provided by the BNPL provider for the initiation of the payment process.
Now the customer needs to open the link and provide the requested details, which include her name, DOB, last four digits of her social security number, contact number, etc. She even has to select the monthly option of 3, 6, or 12-month repayment terms. Based on this, her monthly repayment amount is decided, with interest, if any. Once the details are filled out, within a few minutes, the payment gets approved. With approval, the customer gets a notification regarding the amount she is authorized to spend. This whole process doesn’t affect your credit score at all, which is one of the perks of this option.
The retailer is paid right away by the BNPL provider, with the exception of the fees for the payment process with the retailer. This allows them to collect the installments on their own, which might be huge in addition to sales management.
Now that the payment is completed, the customer begins her repayment of the credit by paying the BNPL provider the accepted monthly amount. The BNPL provider doesn’t charge anything extra, such as late fees or other interest fees. Once the customer pays the installments, he becomes the sole owner of the product he purchased. With this, the customer gets to purchase what she wants without hesitation or being too conscious of her budget. And the retailer gets to sell his products at his desired price. In addition, all this process is effortless and easy, providing excellent customer satisfaction. This further leads to customer retention for the retailer.
We will deeply delve into the benefits this buy now, pay later option provides for both the customer and the retailer.
How is it impacting customers?
Buy now, pay later has been a huge comforting factor for customers with their shopping budget during these pandemic times. Here are the benefits of the buy now, pay later payment option that customers get to enjoy.
Increased purchase capacity
Many of the customers are conscious of the amount they spend on shopping. This limits their desire to purchase products that require a huge amount of money upfront. But with the buy now, pay later option available during the shopping process, they can pay for the product in installments over a specified period of time. This makes shopping budget-friendly and allows customers to buy more products without having to compromise.
Instant access to credit
Buy now, pay later offers customers credit within a few minutes at the point of sale itself. They don’t have to look for other credit options, making it a seamless purchase.
User friendly
Customers can avail of the credit-buy-now pay later option using a BNPL provider app. It requires the entry of some necessary details. The customer can make the purchase after the approval, which usually takes only a few minutes. For ease of payment, the BNPL provider apps come with QR code support, scanning the QR code to make the payment. Some allow the users to make the transaction through UPI.
Security features
Buy now, pay later offers a secure method of payment without the use of the customer’s card, eliminating the need to punch in their PIN, key in their net banking credentials, or make a transaction through an e-Wallet. In this case, the exact amount of credit for the purchase is approved before the purchase. An OTP is generated and sent to the registered mobile, which is needed at the time of purchase.
How is it impacting retailers and their eCommerce?
Now we will see how, by integrating the buy now, pay later option with their businesses, the retailers are benefiting.
Increase in sales with a decrease in cart abandonment
As the buy now, pay later option offers the necessary credit at the point of sale, there is no need for the customers to look for alternative credit options or go accordingly with their limited budget. This helps in reducing cart abandonment due to lack of money. This also encourages the customers to buy products that they usually think are out of their range, as now they pay for them in small installments over a period of time. All these ultimately lead to an increase in sales for the retailer at his desired price tag.
Customer Retention
Buy now, pay later provides a seamless transaction for both customers and retailers. This helps in increasing customer satisfaction, and the customers are sure to come back to the retailer.
Attract new customers
Customers, knowing the benefits of this mode of payment, are opting for it wherever possible. By integrating their businesses with the buy now, pay later option, the retailers are able to cast a wide net for new customers.
With its popularity, buy now, pay later is not going away anytime soon. So if you are a retailer and don’t avail of this payment method, integrating it with your business has a lot to offer you. Grab the opportunity and improve your business further with Buy Now, Pay Later.
