What Are The Benefits Of Bnpl?

If you are someone who loves online shopping, then you may have come across (or even start using) ‘Buy Now, Pay Later’ (BNPL) purchasing services. While this payment alternative is still quite new, it has already amassed a large following. Even large conglomerates such as Amazon and PayPal are now offering BNPL payment options as part of their digital services. But why would people choose to use BNPL or a BNPL provider? Why not just stick with a credit or debit card? What makes BNPL so special?

Here in this article, we take a closer look at what BNPL is, its benefits, and why people might choose to use it.

What is BNPL

So, what exactly is BNPL, and how does it work? Basically, as its name suggests, BNPL is a type of short-form payment service. It allows customers to delay the final bill and stretch out their payment. After checkout, the remaining payments are bundled in instalments and are typically paid within 30, 60, or 90 days. Unlike credit cards, BNPL is interest-free and can be easily implemented at checkout. Because you are often spreading out the cost of your purchase into multiple small instalments, BNPL is also referred to as ‘point of sale instalment loans.’

With so many BNPL providers and options such as Biller solutions out there, it is important you understand their payment plans, so you know which one is the best suited for you.

What are the benefits?

So, what are the benefits of choosing BNPL? Well, one such benefit is already in its name. The fact that it allows for deferred payments means that payments can be stretched out. For the business, this means that the BNPL provider will take on the risk of delayed payment because they already get paid upfront. That being said, here are a few more reasons why you may want to consider using BNPL when buying things online.

Can help to attract new customers

Surprisingly, BNPL can help to attract new customers who may be more inclined to use this payment method. According to statistics, American shoppers that used BNPL rose to 80% between 2020 and 2021. This was most likely the result of the COVID-19 pandemic, which necessitated people to comply with social distancing guidelines instead of interacting face to face. This included retailers as well, who had to rapidly adapt and pivot to offering online shopping. Data further suggests that 40% of BNPL users comprise of Millennials, with Gen Z’s quickly supporting it as well. As such, if your business is looking to attract and cater to a younger audience member, you might consider adding a BNPL service to your online shop and checkout service.

Accessible to a wide range of consumers

As BNPL is an incredibly flexible payment method, this means that customers can complete their checkout process even if they have not yet received their paycheck for the month. Data has also demonstrated that the convenience of the checkout process is a major deciding factor in customers choosing to purchase from a particular online store. If a shop’s checkout process is too cluttered and confusing, consumers are likely to drop the purchase and look somewhere else to buy. However, by using BNPL, customers are more likely to go through with the purchase as it is so convenient. Unlike a credit card, customers can also access their credit even if they do not have a very good score, which can lead to more sales for your business. As a result of being so inclusive, this means more people are likely to convert and purchase your products.

Moreover, it is important to remember that a significant amount of online consumers do not have a credit card (around 20% of them). Whereas a majority of them (around 55%) have already maxed out at least a card. As such, even without a credit card, people can still use BNPL to complete their online shopping, without worrying about interest even!

Encourage customers to buy high-value goods

Unsurprisingly, if you are allowed to spread the cost over a period of time, then consumers are more likely to buy higher-valued goods online. This is because BNPL if used correctly and paid on time, can help reduce risk. According to a press release by Quandpay, merchants that used BNPL for e-commerce have seen a 20% increase in conversations. In addition, they also saw a 60% increase in the average checkout value. Not bad for such a small move!

Soft credit check has no impact on credit

To make sure that a buyer is credible and will likely pay back the loan, a vast majority of BNPL providers will run soft credit checks on their clients. This will help to confirm whether or not they are eligible for a loan. Fortunately, unlike hard credit checks which can dent a person’s credit score, a soft credit check will not do so. However, if a person keeps being late to their payments, this information will get reported back to the credit bureau.

Increase sales volume

Currently, with the rise of e-commerce, online shopping, and other alternative payment methods, BNPL has seen a rise in retailers’ sales volume. Customers can now afford to buy more items as a result of deferred payments. Additionally, BNPL can make the checkout process incredibly easy. As a result, retailers do not need as much time to convert their stocks into sales, meaning customers are more likely going to be satisfied with their speedy service. With BNPL being incredibly popular with the younger generation (Gen Z and Millennials), both demographics are only going to steadily grow from now on.

Improved customer loyalty:

Customer loyalty is incredibly important since a business can easily get repeat sales this way. One way to boost your customer loyalty is through BNPL. This is because it is extremely attractive, and likely to be relevant to a wide range of consumers. By increasing payment flexibility for your online products, your brand can be seen as creative and innovative. This aspect is important as innovation is one of the greatest ways to maintain competitiveness and market leadership. Another thing you may want to consider is having a dedicated support staff alongside a BNPL payment alternative. This way you can accompany a customer along their retail journey and give them better service, thus improving your customer’s loyalty. After all, consumers are happiest if they have the most control over their purchasing decisions and offering BNPL is a way to financially empower them.