“Buy Now, Pay Later” Service: How Is It Transforming The Online Shopping Experience

Dec. 24, 2021, 4:18 p.m.

As like every year, holidays are around the corner, and people are in full swing of festivity and all set to open up their pocketbooks. But after the pandemic, things have not just remained the same. The severe hit of the epidemic has caused a cataclysmic shift in consumer behaviour. While many people either have their laid off or pay cut, therefore, the uncertainty in income has restricted the purchasing power of customers and shifted their consumption patterns towards their essentials.

However, on the other side, we can’t ignore the fact that in recent years, the online shopping landscape has undergone tremendous shifts and transformed the way e-commerce functions. Moreover, e-commerce has become a fastly surging platform and a predominant channel of shopping.

But many of you are wondering how online shopping or e-commerce businesses are flourishing to their fullest while the global economy is in shambles.

Well, in this context, “Buy Now, Pay Later” (BNPL) services have gained immense popularity in the e-commerce industry and allow e-retailers to offer micro-lending models or credit systems to their users. So whether you are planning to shift your brick and mortar business to an online platform or considering updating the service of an e-commerce business, implementing BNPL services to your online shopping app will be a game-changer in 2022.

If you are thinking that only having an e-commerce app for your retail business is enough to survive in this highly competitive world, then you are mistaken. You need to match the changing needs of the market. And BNPL services are the new normal for e-commerce businesses.

If you are new to this term, you must be surprised what exactly it means by “Buy Now, Pay Later” Services in E-commerce.

Here we explain to you …

How Does Buy Now Pay Later Services Transform Online Shopping Experience?

In recent times, the Covid-19 pandemic has brought a paradigm shift in the global economy and forced e-commerce businesses to adopt new payment options to make the entire shopping experience burdenless for the customers. And that’s where a pandemic-related shift to online shopping and digital payments has brought a progressive wave in several sub-industry opportunities, and one such potential opportunity is “Buy Now Pay Later”.

Since the fintech industry has quickly released the credit gaps between customers and businesses, therefore, they have come up with numerous payment services in recent times to cater to the urgent demand for seamless credit access on shopping.

Before we dig deep into the concept of why BNPL services in the e-commerce industry are surging in demand, it is important to understand why BNPL services in the E-commerce industry are rapidly gaining importance.

The moment you decide to take your brand online, surely a major segment of your targeted buyers are Millennials and must be grown up enough that they have finances to spend on their own. Before getting straight into the process to hire an app development company, you need to understand that Millennials are expected to be the main drivers of e-commerce spending growth and to capture that growth, retailers have to understand that BNPL services can provide seamless shopping options to them.

Buy Now Pay Later services can offer interest-free and buy now and pay later instalment payment options that directly address the Millennials.

Most e-commerce businesses are in a dilemma whether implementing these services to their online shopping platform will be a worthy decision? For many businesses, BNPL services are completely customer-centric. Before you are going to believe this statement, here you need to understand why it is becoming more popular these days and how “buy now pay later” services work.

Why You Should Incorporate BNPL Solutions in Your Ecommerce Solutions?

Since now you have understood the concept and its working model; therefore you must be curious to know why it is important to integrate BNPL services into your existing e-commerce app.

Firstly, BNPL services are globally expanding and in this context, it’s a common myth that these services are mainly for the fashion sector. However, the fact is, these payment options can be used for wide products.

For example, Amazon itself has chosen BNPL services for a large choice of products such as electronics, utility bills, and more.

If you are still wondering, then you need to check out these market insights of Buy Now Pay Later Services:

According to the survey reports, it has been discovered that about every one in three UK customers is used to paying with Buy Now Pay Later services while purchasing casual wear.
31.4% of customers use BNPL services while eating outside.
It is reported that 25.7% of respondents used a BNPL service while purchasing beauty products.
20% of BNPL services are used for buying tech products.
18% of BNPL services are utilised for a travel purchase.

With these statistics, it is fair enough to say that “Buy Now Pay Later Services are growing in popularity, and customers are expecting to have their payment option while shopping online in the future. You can hire a software development company to add this feature to your existing e-commerce app or either ask to customise the payment app for your business. Regardless of the business vertical, it will be great to add the possibility to pay in different instalments. This way you can attract more customers and encourage them to shop for more products.

How Does Buy Now Pay Later Services Work In E-commerce Industry?

“Buy Now, Pay Later” services are also familiar with the name of “Shop Now Pay Later”, which offers a pay later option to the customers and allows them to choose a financing plan that suits their ability to repay the amount. Retailers can leverage this opportunity and empower customers to shop whatever they desire without having to pay the entire cost upfront.

In the last several years, the Fintech industry has become much stronger than ever and seamlessly addresses the pain points that evolve around financings, such as the complexity of handling credit cards and their high-interest fees, or more.

Today, the Fintech industry has empowered e-commerce businesses to offer Pay Later Solutions that allow shoppers to purchase their product and pay in a predetermined number of instalments that they need to pay over time. All you need is to hire a mobile app development company that can help you implement these services to your online shopping platform. But the central question that has remained unanswered that how does it work?

The leading e-commerce application like Amazon has already introduced BNPL services by tying up with a bank/non-banking financial services company.

At the checkout process, Amazon provides the feature to make a payment by selecting the “Pay Later” payment option. If users choose this payment option, they will be further asked to select the repayment option. But in the case of first-time shopping, users have to complete KYC and get their credit limit approved by the app.

If you are really impressed with Amazon Repayment services, then it can happen in two ways:

Pay Later Options in E-commerce Apps

Manual Repayment Option

If you are considering implementing the repayment option like Amazon, then it provides you with a dashboard for manual repayment. You can split the amount into various instalments and be able to check for the outstanding balance once the instalment is deducted from the bank.

Here are the few things you can consider including in the app:

-Pay Later: Repay the full amount after 30 days.

-Repayment: Pay Later instalments into 3 or 4 equal, interest-free instalments.

-Finance The Amount: The expensive purchase amount can be split into 36 monthly payments but some interest charges can apply.

Do you have an article that can be relevant to the African Tech space?

Submit your news stories, articles or press releases to editor@digitaltimes.africa

Fill the form

Auto Repayment Option

It is one of the most convenient ways of repaying the amount which seamlessly works with a one-time set up during registration or at the time when users are making their first-time purchase using an e-commerce shopping platform. To make this option work flawlessly, you can hire a mobile app developer that can help you set auto repayment setup and allow customers to safely link their debit card or bank account of selected banks by completing a one-time transaction verification of the lowest amount. The amount will be refunded within 5 to 7 business days to your bank account.

Once this is set, the amount will be automatically deducted from the linked account or bank.

Customer’s Perspective on Pay Later or Checkout

Usually, what happens when customers are accessing e-commerce shopping?

Once they land on the e-commerce shopping app, they find an item they like, add it to their cart and check out the process. But the thing that hinges in between is offering BNPL services alongside traditional payment options like a credit card, debit card, or PayPal. So if you are considering hiring an app developer to implement this payment option to your e-commerce app, then you just need to add another option to buy now, buy later with an app. This option actually encourages customers to shop for more with flexible payment options and satisfy their current shopping needs.

Pay Later at the Point of Sale

Purchases made through “Buy Now, Pay Later”, usually charged to their account with the option to pay immediately in 30 days or via financing. These types of payments usually happen through e-commerce apps and allow customers to generate QR codes that can be scanned at the point of sale. The retailers get credit from the app and customers will repay the amount later.

In a nutshell: The “Buy Now, Pay Later” services work both ways. On one side it provides the ability to choose how and when to repay the amount without having to pay interest and increases the spending power of customers. Whereas, on the other hand, it allows retailers to get their payment at the time of purchase. This way “Buy Now, Pay Later” services work in e-commerce applications and make your app ready to fulfil future needs.

How “Buy Now, Pay Later” Services Are Better Than Credit Cards?

Are these Buy Now Pay Later services replacing credit cards? How are these services better than using Credit cards? If you are still clueless as to Why these BNPL services are surging in demand…

Here are a few reasons why they are getting more and more popular among customers in online shopping:

Easy to Use and Instant Processing

The biggest benefit of using BNPL services over Credit cards is the convenience. To use these credit cards, users need to verify their spending limit before starting shopping. Moreover, they are required to complete a basic process of information and get the credit amount instantly. However, by hiring a mobile app development company, you can cut down the hassle of using credit cards for extra credit limits. In the case of BNPL, anyone over the age of 18 + has to just complete the KYC procedure and have to check which leading partner approves the credit loan. Rest they need to link bank account details or debit card details to make their further process work.

Maintain Payment Transparency

BNPL services are more transparent and less complex than using credit cards. You just need to pay monthly instalments, and that’s it. Pay later options are interest-free, transparent and ensure a one-tap user experience. Credit cards are not a good fit for those who are new to credit payment options and may end up getting stuck in a huge debt trap.

Furthermore, Credit card options come with the pains of OTPs and payment failures, where BNPL services are absolutely free to access and allow customers to pay in no time. This is the major reason customers are inclining towards this payment option.

No Onboarding Fees

The biggest pain associated with credit cards is they usually add various hidden costs such as joining fees, annual service fees, late payment fees, and more. However, BNPL services are simple, clear, and easy to get started without paying any kind of onboarding fees.

Interest-Free Money Lending

When it comes to credit cards, they usually come with an interest-free credit period of up to 45 days. However, with BNPL services customers are allowed to split expensive shopping amounts in up to 36 monthly instalments with no interest fees.

In a nutshell: Buy Now Pay Later services are a great option for those who do not have any credit history but are looking for short-term credit options. By adding BNPL services to the e-commerce business, you can provide better payment plans with no interest fees, which will ultimately increase the power of purchasing.

How Does Using Buy Now Pay Later Services Advantage Retailers?

When it comes to managing online shopping platforms, there are several retailers associated with the platform to offer a wide collection of products. So being a host of those retailers, you’re equally responsible to deliver an overwhelming business experience to retailers as well. You may have hired a mobile app developer to ensure the excellent UI/UX design of the app, but you also need to make sure that retailers will get their funds transferred immediately after a customer’s purchase.

Many e-commerce businesses are afraid of offering this feature to avoid credit risk. But adding this pay later option is beyond that and everyone is protected. With the implementation of this feature, you can offer a wide ray of benefits to retailers.

Here are some of the benefits that retailers will enjoy by implementing a BNPL option:

Increase Sales and Conversion Rate

According to the survey report “Buy Now Pay Later” services can increase 20–30% of average basket size.

Whether you are investing a big chunk of the amount directly from your bank account or using a credit card with high-interest rates, it is always difficult to purchase an item with an expensive price tag. That’s where BNPL services can transform the purchase attitude of customers and encourage them to buy it now and pay later for that expensive product without having to bother with any interest fee.

Offering monthly repayment options to the customers can reduce the abandoned carts and encourage shoppers to complete their purchase without taking any stress of paying the entire cost upfront.

Increase Customer Loyalty

One such concern associated with online shopping is, customers always wanted to feel the quality of fabric between their fingers or wanted to see whether the product will fit their needs or not. That’s where “Buy Now, Pay Later” services allow customers to buy the product without having to pay any amount upfront.

According to the survey report, 66% of the customers say that they check return policies before they make a final purchase and the majority of the stores have strict return policies.

Let’s say, you need to buy a wedding gown but without seeing the outfit or trying it you may do it now and reject it later, and then having to send it back to get a refund is always challenging. But BNPL services allow you to order as many gowns as you like without having to pay for anything. Even the returns are safe and free. This increases the average order value and allows customers to buy more than they are expecting to buy as there is no burden of paying an entire shopping amount upfront.

By offering these BNPL services along with easy yet free returns will help businesses to build better relationships with customers and provide them more reliable space to proceed further for shopping.

Ensuring Better Customer Experience

While it’s one of the most important aspects that you can’t afford to skip while managing an online retail business. Since the major customer segment is Millennials who love shopping online, browsing the end number of products and prefer uncomplicated delivery. On the same note, they also demand a seamless user interface and expect a superb shopping experience that encourages them to shop again over again on your site.

So Buy Now Pay Later services will not only meet their urgent credit demands but also encourage them to do more shopping to have more reward points in their shopping account.

Conclusion

Whether you are running an e-commerce business or planning to thrive in this multi-billion dollar e-commerce industry, your targeted customers need to be at your top-most priority and accordingly provide value-added services to your clients. And integrating your business with Buy now pay later services is one such step to make your app ready for future customers.

To add the possibility of paying later, you can hire a mobile app development company that allows customers to buy anything from anywhere by choosing to opt-in later with interest-free monthly instalments. This will be beneficial for both customers as well as retailers. For customers, it provides the flexibility of paying later with no interest rate.