Buy Now Pay Later is a solution for point-of-sale financing that has grown increasingly popular in recent years, particularly among the younger generations. Point of sales (POS) financing describes methods for giving customers flexible, pay-over-time options.
Top four reasons why customers said BNPL is better for them:
Respondents were allowed to choose multiple options. As per statistics, 39.4% of customers said that they select BNPL as they want to avoid paying credit card interest, 38.4% said they want to make purchases that would otherwise not fit their current budget, 24.7% said they want to borrow money without a credit check and 16.3% said they do not like to use credit cards. The global pandemic worsened the situation of financial stress, like shrinking credit limits. Due to this, the overall usage of credit cards declined over the past years, leaving an opening for different payment methods to emerge – BNPL.
As an alternative option to credit cards and other forms of financing, BNPL solutions are designed to allow shoppers to purchase their products and pay in installments. These solutions are often offered to customers with little interest rates, meaning no additional cost to the customer.
Who is the targeted customer for the BNPL solution?
The solution is targeted at the new generation with an extremely flexible mindset. The major portion of this market includes Gen-Z people.
According to a Forbes [1] study, the growth of BNPL among the young generation – especially Gen Z – has grown about 600% since 2019, while the rate for millennials has grown by three folds.
How does the BNPL solution work?
Customers browse and fill their carts with products they want to buy. The total price value, taxes, and shipping are determined for checkout. To complete the order, rather than using your credit card or debit card, the option of “buy now pay later” is selected as a payment option on the portal. Now, products will be delivered and payment can be fulfilled over time in several installments.
How does using BNPL benefit retailers?
BNPL is definitely a win-win for both businesses and customers as well. Businesses want to sell their products and customers do not want to worry about payment even if it is delayed for a few days or so. This solution creates higher customer lifetime value as it gives customers more flexibility and control over how they buy products.
When customers feel the ease of shopping, they come again for a repurchase – and hence will be profitable for the business.