As of 2022, around 360 million people use Buy Now, Pay Later when shopping online or in-store. Moreover, 1 in every three customers at least considers using Buy Now, Pay Later in their purchase.
If your shop still has no Buy Now, Pay Later enabled, consider adding one now. You can miss out on a 7–8% increase in sales by simply not having this option.
Additionally, almost 30% of Americans claim they don’t have a credit card, with qualification problems as the primary reason. As a seller, you cannot just ignore these numbers. This article will explain why and how to transition smoothly to Buy Now, Pay Later. Keep reading!
What is Buy Now, Pay Later?
Buy Now, Pay Later, also known as BNPL, is a payment option that lets you shop without paying in full for your purchase at the point of sale. You can repay within three months or even 1 or 2 years, depending on your credit score and purchase amount.
In addition to that, there is a credit limit, which increases or decreases depending on your credit history with the platform. Overall, it’s like having a credit card minus the actual card and the hassle of applying for one.
From the customer’s point of view, a BNPL option is a great relief that makes getting a long more achievable. No more time-consuming background checks and interviews to get loans for a simple purchase!
From the seller’s perspective, you can encourage more customers to buy. BNPL offers flexibility to reduce the financial burden of immediate payment. This is especially true for large purchases.
There are many Buy Now, Pay Later platforms these days. By paying some fees, you can let a third-party service handle all your BNPL transactions. That said, Buy Now, Pay Later is a win-win for all three parties: the customers, you, and the BNPL service.
Here’s Why You Should Add Buy Now, Pay Later to Your Online Store
Aside from convenience, there are many reasons why you should add the Buy Now, Pay Later option to your store. You can increase your sales, gain a competitive advantage, and more. Here’s a deep dive into each advantage of using a BNPL service.
Increase Your Sales and Conversion Rate
The e-commerce payment options enabled in your store can significantly affect your sales. In fact, RBC Capital Markets estimates that a BNPL option can increase conversion rates by 20 to 30%. Take this scenario:
You place ads as marketing to attract potential customers to browse through your shop. Having no money yet, they added it to their carts. However, cart abandonment reminders only have a 39% chance of being opened. The other 61% may be that customers have forgotten about it or have seen another product they like.
On paper, the marketing cost it took you to have the potential customer click on your ad is a success. But at the end of the day, you aim to make a sale. That’s where Buy Now, Pay Later helps you. There’s an actual conversion rate when customers can buy the product immediately.
| 🔖 Helpful Article:
Aside from adding a BNPL option, there are many other ways you can decrease cart abandonment. While you can’t force people to complete an order, you can fix a broken sales funnel. Profitable Media’s article on tackling revenue loss with an abandoned cart strategy can help improve yours! |
It Enhances Customer Experience
As mentioned, Buy Now, Pay Later is a “less complicated version of credit cards.” To have a credit card, customers need an excellent credit score, and banks often conduct a thorough check on the client’s financial status. Moreover, the credit limit highly depends on the person’s creditworthiness or income. Working on increasing it can be difficult.
On the other hand, many Buy Now, Pay Later platforms only conduct a soft credit check. Some don’t even check the customer’s credit history at all. They just set a pre-approved initial limit, which increases as the customer continuously uses the platform.
Buy Now, Pay Later offers a safe option for customers and sellers to engage in a credit sale. Customers don’t need to connect their credit cards to your shop if they’re uncomfortable doing so.
There’s a Minimal Risk on Your End
Instead of providing an in-house BNPL service, the Buy Now, Pay Later platforms let you outsource it. This saves you from the risks and hassle of past-due payments. Compared to the loss and resources it takes, merchant fees from BNPL platforms can be a more practical choice.
Get Ahead of Your Competitors and Keep Loyal Customers
Customers have more flexible payment options when you enable BNPL in your online store. Therefore, they’re more likely to buy from your store, especially compared to stores that don’t have BNPL yet. If you’re among the first to integrate a BNPL service, customers can distinguish your shop and stay loyal.
Customers Buy More Per Order
Since there’s a flexible payment option, customers are more confident to “haul” as many products as they like in your store. As long as you choose the right BNPL platform, the average value per order can increase by up to 45%. Be sure to research what BNPL platform is right for you, which brings us to the next topic.
How to Enable BNPL to Your Online Store?
It only takes a few taps and clicks to enable BNPL in your online store. All you have to do is choose the right platform, integrate it into the shop, and then introduce the new payment option to your customers. Let’s proceed to the first step and the most crucial: choosing the right BNPL platform.
1. Choose
To have a Buy Now, Pay Later option in your store, you should install BNPL first. There’s much to choose from, so here’s a quick overview of the top BNPL platforms today.
| BNPL Platform | Description | Associated Fees |
Afterpay |
Afterpay is among the leading BNPL platforms today. It offers interest-free payments and up to 12 months of installments. | Merchant Discount Rate (MDR): 3 to 7% for every transaction |
Klarna |
Klarna is most famous for its “Pay in 4” option, which lets customers repay in 4 installments. It’s perfect for high-end boutiques, electronics, and beauty stores. | Fixed Rate: $0.30 per transaction
Variable Fee: 3.29 to 5.99% per transaction |
Affirm |
Affirm offers customers customizable and more flexible payment terms. This is perfect for electronics businesses, home improvement, and travel packages. | Fixed Rate: around $0.30
Variable Fee: 2 to 6% Note that this is only an estimate. Affirm does not publicly disclose its merchant fees. |
PayPal Credit |
PayPal Credit, with its association with PayPal, is a trusted BNPL platform for many customers. It is perfect for a wide range of niches, including customers who aren’t yet too familiar with BNPL. | Fixed Rate: $0.49
Variable Fee: 2.99 to 3.49% |
2. Integrate
Many companies have separate platforms for businesses; others require developer features, and some use third-party integration. Here are the steps to integrate the Buy Now, Pay Later platforms into your online store.
Afterpay
Afterpay offers an easy integration process for many e-commerce platforms like Shopify, Wix, BigCommerce, WooCommerce, and many more. Depending on the platform you use, it will only take a few clicks:
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For more information, here’s an in-depth guide for each e-commerce platform.
Klarna
Klarna also works with many e-commerce platforms, like Shopify and WooCommerce. Before integrating Klarna into your online shop, sign up for the platform’s merchant portal first, then follow this:
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Once you’re in, you’ll find platform-specific tutorials to connect Klarna to your shop.
Affirm
Affirm connects with Shopify, Magento, Salesforce Commerce Cloud, Wix, and WooCommerce. The ease of the process and the customizability of terms differ on each platform. Here’s a general guide:
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If you need more help, Affirm provides a thorough guide to integrating BNPL into your checkout page.
PayPal Credit
Paypal also integrates easily with many popular e-commerce platforms, like Shopify and BigCommerce. Note that PayPal Credit is only available now in the US, UK, France, Germany, Spain, Italy, and Australia.
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3. Introduce
Once you connect BNPL to your online store, all you have to do is let your customers know. You can add a little promotion banner on your page, post it on your sites, or run ads. Don’t forget to monitor your BNPL transactions on the merchant’s portal of your BNPL platform.
For further assistance, here are some tips to remember when introducing BNPL in your online shop:
1. Educate Your Staff.
As of 2022, 63% of consumers do not fully understand BNPL services, with 7% not understanding them. When introducing BNPL to your customers, establish trust-based marketing with reliable staff who can explain BNPL effectively.
It doesn’t mean your staff should be “all techy” and talk smart. But be sure to have a dedicated discussion—or even a seminar—about how Buy Now, Pay Later works.
2. Offer Exclusive Discounts.
The best way to get reluctant customers to try BNPL is with a good discount. By just changing the payment choice, who could resist trying out your BNPL option?
Upon establishing customers’ trust, customers will switch to BNPL, ultimately spending more per order. Additionally, the discount can double as an upselling strategy so the customer orders more.
3. Add a Buy Now, Pay Later FAQ Section.
Aside from your staff, your website itself should answer basic inquiries. In fact, 51% of customers expect your business to be available for inquiries 24/7. But obviously, that’s not possible. FAQ sections, on the other hand, can help answer basic operational questions while customer service handles more technical ones.
4. Don’t Forget Customer Feedback.
Customers are the ultimate judge of any aspect of your business, so don’t forget them when you start using BNPL. Listen to your customers about what to improve, add, and change to make your new BNPL option effective and helpful. You can also try these customer retention tactics to ensure your customers are always considered.
5. Offer Multiple BNPL Services.
Last but certainly not least, add as many BNPL platforms as possible. You’re not limited to only one platform when customers have different services they’re comfortable using. Remember, the more options you offer, the more people you can attract to place an order.
Frequently Asked Questions
Do I still get paid if the customer does not pay for their Buy Now, Pay Later purchase?
Yes, you will still get paid. When a customer uses BNPL, the BNPL platform handles the purchase amount, meaning the BNPL is where the customer is indebted.
Are there requirements to use BNPL as a seller?
Many platforms only have basic requirements to let you use their BNPL service. These include a registered business name, clear prices, and shipping and return policies.
Do I get paid immediately when a customer buys through BNPL?
It depends on the platform. Klarna, for example, has a payout schedule where they pay the merchant the full amount of sales for the period. Meanwhile, Afterpay, Affirm, and PayPal Credit pay the seller upfront. Regardless, you will receive the full amount of the customer’s purchase minus the standard merchant’s fees.
