However, in the long run, offering BNPL can pay off. The buy now, pay later merchant fees are usually higher than those charged by credit card companies. Some providers take a small percentage and transaction fee ($.25-$.30) Fees vary between service providers and agreements with retailers but tend to be between 2 and 8%. While accepting buy now, pay later is a good business decision, it isn’t completely free for merchants. Regardless of structure, each of these options boasts solid reputations with merchants and shoppers alike. Some charge interest, while others perform a credit check or require a down payment. While these apps allow consumers to split their purchase payments over time, the actual structure of each varies. Here are a few of the most popular easy payment options: Convenience Common Buy Now, Pay Later AppsĬonsumers have many options when it comes to BNPL providers.Faster sign-up than credit card applications.Lower interest rates than credit cards (often 0%).Receiving their item before they have paid for it in full.In a recent survey, 45% of respondents have used BNPL for this reason.īuy now, pay later offers additional benefits for consumers, including: Research indicates that the most common reason to use buy now, pay later is to make purchases that fall outside someone’s typical budget. There’s no doubt many people prefer to pay for their purchases over time - sometimes it’s their only option. The transactions are processed similarly to credit cards, meaning the retailer pays a small fee to the service provider. Since the service provider pays the retailer, the retailer gets paid in full sooner, typically within three business days. All in all, adding BNPL is a win-win for merchants – they will gain more customers, who may spend more on their site or at their store. The same study found that 62% of BNPL users believe it could replace their credit cards altogether.īNPL also has been proven to increase conversion rates up to 30% and grow the average transaction size up to 50%. Buying goods and services online is a must for this consumer group, and BNPL makes it even more convenient.Ī 2020 study surveying 2,000 Americans about their BNPL habits found that nearly 66% of consumers have used this alternative method of payment. These generations were among the first to grow up with online shopping. Merchants Attract More Consumers Who Spend More Moneyīuy now, pay later is extremely popular with Millennials and Gen Z shoppers. Here are examples of how merchants benefit when offering this alternative payment method. How Buy Now, Pay Later Helps MerchantsīNPL offers benefits to both consumers and merchants. The customer simply clicks the BNPL icon, finalizes the purchase, and is redirected back to the company’s website to complete their transaction. To ensure consumers are aware of it as an option, eCommerce merchants typically display a BNPL merchant logo alongside the usual payment options, like credit cards and PayPal. Most buy now, pay later plans are designed to be paid back in four, interest-free payments, however there are some instances that come with an interest charge. The shopper agrees to pay for the transaction in installment payments and is able to receive the goods or services right away. While credit cards offer a revolving credit line, BNPL offers consumers a short-term financing option. In this article, we explain what BNPL is and how it works for merchants.īuy now, pay later is a form of consumer credit that differs from traditional credit cards in a few key ways. Consumer adoption of buy now, pay later has been fast-tracked in part due to major retailers like Amazon and Walmart offering it as a method of payment. Since 2020, this alternative method of paying for purchases has surged alongside the growth of online shopping. In 2015, a company called Afterpay introduced a new payment option: buy now, pay later (BNPL). Until recently, the most commonly accepted form of credit has been credit cards, however consumer trends are shifting to favor a different form of paying over time. The credit system has been around, in one form or another, for hundreds of years.
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