Change is inevitable. But the rate of changes in the eCommerce industry is ever 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 are similar to this payment method over the years. With minor changes and greater rebranding, buy now pay later has become the popular payment option over 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 the budget conscious customers to buy expensive items and the ensuring retailers a certainty in their product sales.
How does it work?
A popular payment method like buy now pay later could not have rosen to popularity, if it is 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 payment in installments which is much more comfortable for her. With 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, within a few minutes, the payment gets approved. WIth the approval, the customer gets a notification regarding the amount she is authorised 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 from collecting 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 and being too conscious about her budget. And the retailer gets to sell his products over 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 the 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 desires to purchase products which require a huge amount of money upfront. But with the buy now pay later option available during the shopping, they can pay for the product in installments over a period of specified time.This makes the shopping budget friendly and allows the customers to buy more products without having to compromise.
Instant access to credit
Buy now pay later offers the 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.
The customers can avail the credit for 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 the 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.
buy now pay later offers a secure method of payment without the use of the customers’ card and eliminating the need to punch in their PIN, keying in their net banking credentials or making a transaction through an e-Wallet. In this, 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 the retailers and their eCommerce ?
Now we will see how integrating the buy now pay later option with their businesses, the retailers are benefitting.
Increase in sales with a decrease in cart abandonment
As the buy now pay later 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 which they usually think out of their range as now they pay for it 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.
Buy now pay later provides a seamless transaction for both customers and the retailers. This helps in increasing the customer satisfaction and the customers are sure to come back to the retailer.
Attract new customers
Customers knowing the benefits of this mode of payments are opting for it wherever possible. 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 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.