People are seeking alternate means of financing, which has been aggravated by the coronavirus epidemic. Buy now, pay later (BNPL) options, which allow consumers to pay in interest-free installments, are continuing to rise in popularity. With a growing industry comes more rivalry among financial services firms. As a result of the pandemic-related shift to online buying and digital payments, various sub-industry opportunities have emerged, such as Buy Now Pay Later (BNPL).
India has one of the world’s largest millennial and Gen-Z populations, and both generations are increasingly contributing to the country’s growing usage of smartphones and digital payments. The enormous growth in eCommerce sales has resulted in a massive boost in market capitalization for leading retail organizations throughout the world. The expansion of the eCommerce industry has resulted in eCommerce firms developing creative strategies to boost customer spending and streamline the purchase process. “Buy Now Pay Later” (BNPL) payment options have evolved as a crucial component of this innovation, allowing customers to make delayed payments on their own terms. Due to the increase in unemployment and unstable financial situations, the tendency has gained a lot of traction throughout the epidemic.
BNPL Solutions
Customers can stretch the cost of their purchase across several interest-free installments using BNPL options. Customers may break down their purchase prices into smaller installments and pay when it is convenient for them. Because of the simplicity supplied on both ends, these solutions have inbuilt benefits for both customers and retailers. Customers have taken to BNPL payment solutions because of the benefits they provide in terms of cash flow management.
# Customers – Customers have the option of spreading their payments out across many installments over a variety of time frames. BNPL payment alternatives, unlike traditional installment-based payment methods, allow consumers to divide payments without incurring interest or additional penalties. The sign-up and checkout processes have also been optimized to reduce friction and allow recurring customers to make one-click payments.
# Merchants – Offering Buy Now Pay Later payments can help merchants boost conversion rates and basket quantities by enhancing consumer engagement and increasing the rate of repeat purchases. Merchants can also benefit from partnering with established payment providers like Klarna, which can give them the security of payment processing without the exorbitant rates.
How does it Work?
Applications that allow you to buy now and pay later Allows you to buy things online and pay for them weekly, bimonthly, or monthly. These applications, like credit cards, may charge interest, but they may also provide “interest-free” periods. If you pay off your loan before the end of the month, you can avoid incurring any interest. On a regular basis, BNPL interest rates are fairly high.
Payment alternatives such as “Buy Now, Pay Later.”
Customers that buy using Klarna’s platform have three main options, however the specifics vary by location.
# After 30 days, you can pay in full.
# Pay Later Installments are broken down into three or four equal, interest-free payments.
# Financing It allows you to break down the expense of larger items into as few as 36 monthly payments. Interest may be charged.
The Checkout Process Using Pay Later
Let’s take a look at the customer’s viewpoint on the buy now, pay later experience. They locate something they want, put it in their cart, and go to checkout. Everything has gone according to plan thus far. However, this is where things start to get interesting. They’ll see ‘Pay with Sezzle’ and ‘Pay with Klarna’ alternatives alongside regular payment options like credit/debit card and PayPal. Along with spaces for entering card information, consumers are given the option to buy now and pay later with Klarna. Consumer buying flexibility is increased through buy now, pay later alternatives, which offer a variety of flexible payment choices.
At the Moment of Sale, You Can Pay Later
Customers may even order a real or virtual Klarna card to pay for anything, anyplace in select countries. This enables people to purchase now and pay later from retailers that do not ordinarily provide this service. Purchases are charged to their account, with the option to pay in full within 30 days or to finance the purchase. Despite the fact that the majority of Klarna transactions take place online, traditional brick-and-mortar stores may also accept Klarna payments. In most cases, this entails the consumer creating a QR code in the Klarna app, which is then scanned at the point of sale. Klarna gives the shop credit, and the client gets to pay afterwards.
Don’t Miss-
Why You Should Pair Your eCommerce Business With a Digital Business Account
What are the Top Ecommerce Website Tricks You Should Follow in 2021?
Benefits of BNPL
Customers are increasingly using Buy Now Pay Later payments to make digital purchases because of the convenience they provide. Once the first client authentication has been done, BNPL payments may be made with a single click to provide consumers with simple payment choices.
Improvements in Financial Convenience
Customers can avoid facing the upfront price of items with BNPL payments due to the postponed nature of payments. Customers may be able to invest their money in better investments and reduce the upfront costs associated with product purchases due to the structure of payments. Merchants are seeing an increase in transaction volume as a result of this financial convenience. Younger customers may benefit from the flexible payment structure by reducing debt pressure and moving away from compounding payments.
The Sign-Up Process Has Been Simplified
BNPL payment providers, unlike traditional banking products such as credit cards, do not require comprehensive financial verification. Younger customers will find it easier to enrol and make payments thanks to the shortened sign-up procedure. The payment simplicity is further aided by the broad acceptance of BNPL payments on the world’s largest eCommerce platforms.
Forecasting with Precision
Companies can properly estimate income and streamline payment streams over a longer period of time with a wide payment spread. Improved economics allow organisations to provide better bargains to customers based on the acquired data, which is supported by the expected revenue scale. Buy Now Pay Later payments are also suitable for client acquisition and expansion due to their value offer.
Improved Brand Reputation
By increasing customer trust, providing accessible payment choices may have a major positive influence on brand value. Due to the accompanying brand trust, offering reputable payment services like Klarna might have a beneficial influence on merchant reputation and assist enhance client traction.
Model for an Agile Product
Unlike credit card payments, Buy Now Pay Later models are intended to give clients with flexible payment choices over extended periods of time. Customers may make greater purchases and feel safe with larger transactional volumes because the payments are interest-free.
Consumers can use BNPL solutions to stretch the cost of their preferred purchases over a longer length of time. It’s also necessary to evaluate the risk of overspending as a result of impulsive purchasing. To ensure timely loan payments and the avoidance of relevant interest for customers, these solutions must be supplemented with smart planning and cost-awareness.
