The e-commerce industry has embraced the new online payment method of purchasing items or products without using credit cards or immediate online banking.
The BNPL allows consumers to get their desired products without instantly paying upfront. The new online payment option works as a weekly payment plan. BNPL is also known for installment payments, Pay in 4, Pay Monthly, pay overtime, or instant financing.
According to Maddy Gaiman, the U.S. Partner Marketing manager at Fintech Company Klarna, BNPL offers a flexible payment option than credit cards, as it has an interest-free installment. Direct-to-Consumers (DTC) stores no longer have to depend on banks and credit cards to make their products more wallet-friendly.
Tom Richardson, a journalist, said that online stores reimburse the fee for this new payment method, as these BNPL companies charge retailers pointedly more than the bank-offered credit cards. Nevertheless, the set rate of BNPL depends on numerous aspects, such as the price of the purchased products.
Benefits of BNPL
Many online stores are already offering this new expense scheme, as they can generate more profit from BNPL without too much risk of bankruptcy. Paybright, a financial Blogspot, posted six reasons why many brands are now offering BNPL:
- Expands its customer base;
- Improves customers’ experience on online shopping and Csat scores;
- Increase sales and revenue streams;
- Reduce sticker shock and lower cart abandonment in stores;
- Offer buy now pay later, with 0% risk in the business;
- Easy and flexible payment option for business.
BNPL: An advantage to e-commerce
Amelia Castellanos, the GM Agency’s President and Founder, also agreed that the BNPL program attracts more customers as it increases the referral traffic. She also added that this new payment option provides customers comfortability as they shop online. Brad Paterson, Chief Executive Officer of Splitit- a global payments company, further explains that installment payment options like BNPL allow consumers and retailers to array with their monetary and commercial values. He also added that BNPL allows consumers to earn rewards from the BNPL providers as they become good creditors.
Report from IBIS world reveals that the BNPL has an illuminating future as the industry will grow at 9.8% yearly exceeding $1 billion in the next five years. Several businessmen and banking analysts say that e-commerce will proceed in expanding pay later systems from credit cards.
BNPL becomes a threat to banks that offer credit cards and loans, as BNPL only requires lesser interests and has a much easier way of purchasing products online than immediate online payment transactions. Indeed, Paypal, Citibank, and American Express now have their BNPL schemes, and many businesses will follow the BNPL program soon.
Nevertheless, Jake Rheude, the Marketing Vice President of Red Stag Fulfillment, advises the public to take time in finding payment solutions that work best for them. Consumers and retailers have their preferences for online payment methods.