Is Buy Now, Pay Later Helpful?
Compare the pros and cons of Buy Now, Pay Later services with our guide. Get started now and make a smarter purchase decision.
Is Buy Now, Pay Later Helpful?
It’s similar to “layaway” or “lay-by” payment methods, except it offers consumers immediate possession of items. Specifically, it enables consumers to make purchases in short, interest-free installments, typically within three to six months, almost instantly.Benefits of BNPL for Consumers
BNPL took consumer finance by storm for several reasons. On top of all is its flexibility, quick consumer possession, instantaneous approval, and inclusivity. These factors solve what in the marketing and business world is called a “pain point.”Pain points are specific unrelenting problems that prospective customers face in a marketplace. These can be anything from difficulty or inefficiency in accessing a product or service to frustrations with their lack of features or a company’s bad customer support. One of these pain points is the inability of customers to make large purchases due to their lack of finances. However, consumers can immediately overcome this with BNPL, usually at low or interest-free rates.Here’s a roundup of what customers can enjoy with BNPL:- Flexible payment method - BNPL allows customers to complete checkout even if their credit is less-than-perfect or they’re still waiting for this month’s paycheck.
- Low to zero interest and fees - Most BNPL schemes are interest-free or low-interest during the installment period.
- Looser lending restrictions - Besides low or interest-free rates, BNPL providers only run a soft credit check, which doesn’t ding a customer’s credit rating.
- Near-instant approval - BNPL financing happens at the point of sale. In other words, it’s accessed and approved at a retailer’s checkout at the time of the transaction, so consumers don’t have to wait days or weeks for the financing approval to come through the post.
- Increased purchasing power - BNPL enables consumers to make purchases at any cost that may otherwise have been unaffordable or unattainable to them.
- Credit building - Paying back BNPL on time may help build and improve credit scores. However, note that only a few BNPL providers report to credit bureaus, not all.
Benefits of BNPL for Merchants
Offering BNPL allows companies to compete and remain relevant in today’s ever-changing market. Not only does it accommodate digital natives and Gen Z shoppers, but it also future-proofs businesses, especially in times of international supply chain disruptions. More specifically, here are the key advantages of accepting BNPL schemes for merchants:- Increased Sales - Increasing consumer purchasing power through BNPL immediately increases the sales of a merchant.
- Increased customer loyalty - BNPL’s flexible and frictionless payment method provides consumers with a seamless and hassle-free shopping experience. In this case, they’ll likely come back to make another purchase and recommend the store to others.
- Higher average cart value - Allowing consumers to pay in installments will drive them to make a high-value purchase.
- Improved cash flow - Merchants are paid in full by BNPL providers at the time of purchase. The more BNPL purchases consumers make, the higher the income.
- Competitive advantage - BNPL is becoming the standard these days. Adapting to it gives merchants a distinct competitive edge over other vendors.
- Lower return rates - Installment payments can also reduce the chances of returning a BNPL product after the purchase.
