Buy Now Pay Later offers an attractive route for both customers looking for an alternative payment method to cash and for online sellers looking to increase their customer base and provide a better experience to their target audience. In this post, we will shed light on what Buy Now Pay Later is, how it works, its ins and outs, and if it’s an option worth considering for your online store.
Buy Now Pay Later Defined
Buy Now Pay Later is exactly what it sounds like. It is a point-of-sale financing solution so that customers can choose an installment plan in purchasing a product instead of having to pay for the full amount upfront.
In the last several years, Fintech has strongly emerged in its challenge to resolve the common pain points in using credit cards with high fees and APRs through Buy Now Pay Later solutions. These are offered to customers with little fees.
How Does Buy Now Pay Later Work?
If you are a Lazada seller, your customers can use Buy Now Pay Later through installments. To do that, they can apply to the following lenders:
- Pay Later
Buy Now Pay Later is completely between the customer and lender. With that, you will receive full payment for your product even if the customer will be using an installment plan as a payment option.
If you are a Shopee seller, your customers can pay for your products through GCredit. This means that Gcash users can pay for your product using their available credits on this platform.
The process resembles the way payments are charged to credit cards. The payment will be charged to the buyer’s GCredit and then the buyer can pay Gcash within 30 days. The customer will not have to pay out of the pocket upon purchase of the product.
Why Is Buy Now Pay Later So Popular Among Buyers?
Buy Now Pay Later has already been around for years but it was only recently when some companies popularized it with younger buyers. It worked like a charm due to the fact that many people have yet to build up their credit to acquire credit cards. So, it makes for an attractive financial solution for big purchases.
Why Should Online Sellers Use Buy Now Pay Later As A Payment Method?
There are 4 reasons Buy Now Pay Later is worth trying out for online sellers:
1. It Increases Sales
The temptation to make a purchase without upfront cost is hard to resist. Therefore, the Buy Now Pay Later feature can help online sellers increase their sales.
Despite the Buy Now Pay Later agreement, the seller will still get the payment immediately because the installment/pay later deal is between a certain lender and the buyer.
2. More Customers Will Be Enticed To Buy
Since people don’t need to pay an upfront cost, you will have increased chances of reeling in new customers into your store.
3. It Could Build Trust
Some customers are hesitant to make a purchase online with the fear of getting dissatisfied or disappointed with their product.
By offering Buy Now Pay Later as a payment option, customers can buy without making a commitment to already pay the full amount. They will have a chance to ask for a refund in case the product is not up to par with their expectations.
4. It Will Prevent Cart Abandonment
Baymard Institute says that around 6% of cart abandonment is due to lack of alternative payment procedures. By adding Buy Now Pay Later into your payment methods, you can see a significant decrease in cart abandonment because people don’t have to pay the full amount upon ordering the item.
When Shouldn’t You Add Buy Now Pay Later Into Your Payment Methods
If Buy Now Pay Later is one of your main payment options, you could have issues later on if it receives negative media coverage.
Some people complain that even though Buy Now Pay Later payment options lets customers get a product without upfront cost, it also results in bigger arrears in the long run due to certain interest rates that customers won’t have to pay if they purchase the item in cash.
One more thing that could result in negative media coverage is the view of some critics that Buy Now Pay Later solutions is a way to trick customers into taking more debt than they need.
If you want to incorporate Buy Now Pay Later into eCommerce stores, we recommend that you limit how you market it.
Don’t make it a forefront of your business. Make it visible in your payment options but if possible, only mention it to customers that you know are interested in purchasing items in high-value items.
Should You Add Buy Now Pay Later Into Your Payment Options?
This depends on a multitude of factors. Some factors to consider are as follows:
- What kind of products are you selling?
- Who are you selling to, what value range does your products fall under?
- What are your long-term goals?
If you are selling high-value items and are looking to increase your customer base in a short period of time, you should incorporate Buy Now Pay Later into your payment methods.
If not, you can still offer it but you should not market it so much. It should only serve as an alternative payment method.
How do you feel about Buy Now Pay Later solutions for your business? Let us know in the comment section.