Buy Now Pay Later option (BNPL) is the latest trend in the Internet town. According to Fool.com, over a third of US consumers have used the service in the last 12 months. Those aged 35 to 44 are the most likely to ask to pay later.
Essentially, with BNLP customers shop without paying at the time of the purchase. Instead, the service provider partners up with a pay-later company that finances the purchase in the form of an interest-free loan.
Some BNPL providers have even partnered with physical stores, so the consumer can walk in, pick their item, and then pay later. Often with physical stores, the first installment is due at the time of purchase, unlike with e-commerce stores. As long as the payment is made on time, there’s no interest on the loan. The most popular buy now pay later option service providers are PayPal, AfterPay, Affirm, and Klarna in that order. FuturePay and QuadPay are other notable mentions.
For e-commerce store owners, this is a million-dollar question. As already mentioned, BNPL opens the door to a vast, mostly untapped market that you can exploit for substantial returns. However, it does come with a few risks that many merchants may be wary of.
Closely studying the benefits and drawbacks of this innovative payment approach can help you make an informed decision.
The main advantage of pay-later services is that you can make customers out of thin air. People who weren’t even thinking about buying will find themselves filling their carts as they can pay at a later date – to the merchant’s benefit.
Three other advantages are as follows;
There are two main challenges associated with buy now pay later option services for small businesses. These are higher merchant fees and integration issues.
Despite the few challenges, the Buy Now Pay Later option, can offer substantial value to e-commerce merchants. Research shows your likely to see more sales, increased order values, and entry into an attractive market segment. Surely, this means it’s worth a try.
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