New shopping experiences with extra features provided by vendors and markets help in drawing customers. In addition, it enables the customers to pay quickly for their purchases and loaded shopping carts. All payment gateway apps have a significant advantage and allow customers to make payments on the go. The buy now pay later credit has a particular boost this year.
This phenomenon has risen from credit cards and other financing schemes. Pay later shopping has proven to be lucrative to both retailers and customers. It helps the customers purchase their items with either no payments or a small payment now and pay the rest later in instalments. This later payment involves low or no interest. This scheme helps in drawing the attention of the customers.
Retailers have no risk in this scheme as the buy now pay later credit provider takes on the risk in case of a default. Retailers are required to pay the provider a small amount per transaction and 2-6% of the transaction value. Technological innovations have reduced the risk of fraud and defaults. Retailers benefit from this as they are now aware of the credit profile of the buyer.
A report shows that 87% of customers interested in the pay later shopping industry are between 22 and 44. GenZ and millennial customers are wary about the debt in the usage of credit cards. Thus, this financial credit scheme draws the customers. The uncertainty of the future also plays an essential role in making the customers lower their credit card usage.
Users say that the buy now pay later option has been used by them to buy electronics. Clothing or fashion items, furniture and appliances, household essentials and groceries.
Benefits to retailers on using the buy now pay later credit
Retailers use this credit scheme to sell high-value goods. They are used to sell low-value goods that need increased conversions, cart size, reach new customers, or keep their old customers. It is rarely used by retailers selling software or items sensitive to cost as fees are higher. Some of the benefits to retailers are:
- Increase sale value: Some sellers claim that using the buy now pay later option has increased their sales by 33%. eCommerce sellers who used this method of selling increased their conversions by 20% and their average checkout value by 60%. This scheme is a method of increasing revenue without seeking out tactics like discounts.
- New customers: The pay later shopping experience has attracted customers who were earlier reluctant to buy products out of their budget. Brands claim that their sales went up by 600% after implementing the buy now pay later option. The brand CEO says that this scheme brought in various customers, including price-conscious customers who think that premium products are not affordable. In addition, the providers of this scheme will help expose the store’s products and their brand to several potential customers.
- Loyalty: Customers are likely to repeat their purchases if they know that the buy now pay later option is available on an eCommerce store. They might like the seamless nature of the customer experience.
Benefits of buy now pay later to Customers
Customers are provided with the option of buying goods now and making POS payments in a flexible period ranging from 3 months to many years. This term depends on the provider of the scheme. Thus, the customer experience is enhanced by making it frictionless. This option helps customers receive their product before payment has been made for it. 42% of users claim that clarity of the terms is the critical priority. 39.1% claim that the ability to monitor spending has increased.
Future implementation of buy now pay later scheme
The buy now pay later scheme usage should escalate with more frictionless, contactless payment and mobile wallets at checkout in retail stores. In just a year, the buy now pay later option in eCommerce went from 3% of all eCommerce transactions to 9% of all eCommerce transactions. In addition, customers are also being offered this credit service outside the eCommerce sector. As a result, payment for purchases with the buy now pay later will increase popularity and credit card payments.