New technologies are increasingly asserting themselves in the retail industry.
All shops are undergoing transformations to meet the new laws of the digital world, in which customers' preferences change more quickly, acquiring new clients becomes more difficult, and marketing becomes more expensive.
Retail must quickly adapt to changing consumer buying habits in order to thrive.
Buy now, pay later is one of the hottest trends in the retail business. Almost every major retailer offers the BNPL option at checkout, and many more are contemplating it.
According to a survey by BNPL provider Afterpay, when presented a BNPL option, 42 percent of Gen Z and 69 percent of Millennial consumers are more likely to buy.
Furthermore, accepting a BNPL as a payment option at an ecommerce site rapidly boosts a store's performance, increases sales dramatically, attracts new consumers, and converts shoppers into repeat purchasers who spend more.
As fintech consultants, we share some insights into the major areas that retailers should consider when launching a new BNPL service.
What Is Buy Now Pay and How Does It Work?
The concept behind buy now, pay later is simple: BNPL boosts sales by allowing customers to spend more because they know they can pay in instalments.
It's an excellent option for people who want to pay in a flexible way without paying credit card interest and keep track of their spending.
During checkout, the customer is introduced with charge options, and upon choosing a BNPL provider, the price instalment alternatives and settlement are presented
Upon completion, the customer is returned to the merchant website to complete the purchase. Consumers receive their purchased product or service immediately by signing up for instalment payments free of interest.
Retailers benefit from BNPL consumer financing plans because they increase sales and avoid high fees of credit cards.
Retailers don’t finance the buy themselves, they seamlessly redirect buyers to a third-party financing institution. Behind the scenes, the transaction is settled as the BNPL provider pays the merchant the full purchase price (minus any fees). The BNPL provider then collects the transaction amount from the customer per the terms of the instalment payment agreement.
These point of sale loans is effective marketing tool for merchant allow attract customer at different stages of the buyer’s journey, increase retail conversation rates 20 to 30% and lift the average ticket size 30to 50% .
When a merchant makes a decision to offer financing to its customers the question how choose the right technology for BNPL need to be resolved.
5 Tech requirements to choose right technology for BNPL:
1. Integrating retailer and BNPL provider's systems
BNPL is real time financing business. Flawless integration between merchant and BNPL provider’s is crucial to conveying a good customer experience, building emotional relationships with customer, and supporting customer’s willingness to repeatedly return to a company to conduct business.
Merchants can integrate directly with the BNPL provider, or they can integrate the option through their existing payment service providers. Integrations through existing payment providers typically lessens the integration burden on retailers.
2. Approval rate
Approval rate is the proportion of positive responses granted to payment terms requests on your store. The higher the approval rate, the more of your customer get offered payment terms, and the more you will benefit from your Buy Now, Pay Later solution with greater average order value (AOV), increased purchase frequency and an uplift in new business.
3. Maximum Choice and Flexibility for Customers
Check to see what sort of flexibility your BNPL provider offers in terms of payment plans. Every shopper budgets differently, so make sure they have options for paying over time the way they want to. Implement the right product which suits to your customer.
4. Delivering the Best Customer Experience
A partnership with a specific BNPL provider can help you grow your business. Consider how a partnership with a specific BNP partner will impact your business. Is there an opportunity to increase sales? Can you offer a unique product or service? Are too many steps that could add friction at checkout? How easy is it to understand the payment schedule and terms?
Make sure there are no difficulties in the BNPL shopping experience.
5. A Good Fit for Your Business
When looking at a BNP provider, you should consider what kind of transaction volumes they handle. Are they easy to work with when processing large amounts of transactions? If you run a small business, will they be flexible enough to adapt to your needs? If you’re a specialist retailer, will they be quick enough to respond to your requests.
We would love to have the opportunity to tell you more about our leading BNPL solution – if you’re interested, why not book a demo today?