Buy Now Pay Later: The Fastest-growing Payment Alternative
Buy Now Pay Later or BNPL as an alternative payment solution has revolutionized global commerce. Although the concept is not entirely new, the amalgamation of this financial tool into the digital space has led to major consumption splurges. People, especially the millennial generation, are able to shop spontaneously on-demand removing any kind of barriers. Consumers can check out without making the entire payment and pay the bill later in several installments.
Unlike traditional installment methods where the item could be taken once the full payment has been made, buy now pay later is an alternative consumer-friendly option that does not keep people from taking their purchases home, immediately. People get to make the payment over multiple installments across a time-period. The BNPL industry is growing significantly that is both expanding the retail industry and increasing the credit access.
The Covid pandemic situation has given a further accelerated the BNPL usage. Amidst social distancing and lockdown conditions across the globe, almost all retailers are providing with this payment solution while consumers are able to make hassle-free purchases.
The buy now pay later payment method is advantageous mainly for the lower income category that also might not have access to credit card facilities. The BNPL services make the payment on behalf of the customer who later pays back the BNPL provider installments.
Advantages for Businesses and Retailers
The buy now pay later model is a practical solution for retailers and e-commerce websites. It is great option for businesses dealing in different products and services that seek to expand their customer horizon.
Increase in Sales
With different kinds of payment options available, consumers are more likely to spend their money for purchasing purposes. The introduction of BNPL technology has witnessed an increase in the overall sales percentage and a rise in revenue.
Attract New Customers
Customers, previously uncertain about making a purchase, are now being lured to make those purchases as a result of the BNPL option. People of different demographics as well as price-conscious consumers are actively engaging in buying and shopping of products and services they were hesitant about.
Building Trust
Opening up a holistic loan-oriented income experience is likely to ensure the return of previous customers and repeat purchases. Moreover, consumers are able to test out a product before committing to it. The long-running benefits of such measures are elevated that also guarantees substantial customer loyalty. This helps build a strong relationship between buyers and businesses.
Lower Cart Abandonment
Consumers quite often leave their carts without purchasing the items due to price apprehension, credit systems and other factors. An increase in payment options that incorporates BNPL methods help lower the rates of cart abandonment.
Benefits for Consumers
Not only merchants, but consumers also profit from the buy now pay later payment plans. Let us look into the key benefits.
Improved Credit Solution
The BNPL method is a safer and better affordable credit resolution for many customers. People are no longer hesitant to make quick or emergency purchases.
Easy To Use
Payments are broken down into easy and manageable fixed installments that help buys to to stick to their monthly budget plans. Also, no additional charges are levied if the installments are paid on time.
Flexibility
Repayments in BNPL solutions are flexible. The user can choose the most suitable tenure and make the repayments prior to the due dates.
Cons of BNPL Methods
The buy now pay later finance tool might not be for everyone. It is advisable to look into the drawbacks before making any kind of commitment.
For Businesses:
BNPL services often incur high costs than other payment gateways. Furthermore, there is an added fee for listing a payment method option in your e-commerce website. In the instance of any problem, the BNPL method can bring upon a negative reputation for businesses. Undesirable media coverage can reduce the value of the brand, drive away customers and party to adverse public opinion.
For Consumers:
The BNPL payment solutions can be the foremost reason for enhanced consumer debt rates. Although advertised as consumer-friendly, buy now pay later methods are a great way into tricking customers to purchase more than what they can afford. Quick and easy purchases can tempt you to break your budget. Moreover, late-charges are imposed in case of failure to make the repayments within the given period of time. Defaulters can be abstained from making further purchases. Critiques also argue that the system of credit cards serve as much better payment options in the long-term. It allows you to make the purchases that you need and willing to afford.
Conclusion
As a result of the entry of mobile wallets and contactless payment experiences, BNPL options are here to stay. Despite the drawbacks highlighted above, buy now pay later services are largely being utilized by e-commerce and consumers alike. They are no-doubt the fastest-growing payment alternative in the market.
