Imagine a prospective buyer surfing through your eCommerce website. Finally, she gets a sight of the product she has been frantically searching for months. She happily carts it and proceeds with the payment. And BAM! She finds out the product is way out of her budget. She reluctantly withdraws, and hence, you lose a potential buyer. Why so? Because you did not have Buy Now Pay Later (BNPL) as a payment option.
As technology is rapidly evolving, the need for digitalization has become more prominent. From payment apps to UPI, we have come a long way. With more people choosing to pay in installments after making the purchase, it has become essential to focus on similar payment modes.
Buy Now Pay Later enables customers to buy a service or product without making the full payment upfront. It is a great alternative to credit cards and has the potential to surpass them due to its more payment-related flexibility. Are you among those who have zero or very little knowledge about BNPL? Then, this blog is just for you.
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What is Buy Now Pay Later (BNPL)?
Buy Now Pay Later (BNPL) is a revolution in the world of payment. Customers can immediately purchase a product or service through BNPL without having to pay the full amount upfront. It is very similar to the way credit cards work. However, unlike credit cards, BNPL is interest-free, which makes it more appealing as a payment mode for today’s generation. Additionally, BNPL does not contribute to the credit score if you do not report it.
It boosts the purchasing power of the consumers. BNPL is known for its significant features, such as immediate approval, flexible repayment plans, transparent fees, user-friendly interface, robust security measures, and higher accessibility.
The last feature enables young customers to choose BNPL over credit cards. It also allows cross-border transactions and local payment methods through various currencies. If you have no clue about how BNPL works, then let’s learn it with BrandLoom – the best e-commerce service provider in the US.
The Way Buy Now Pay Later (BNPL) Works
BNPL is considered a short-term financing option that allows you to pay for a service or product in interest-free installments. Despite its growing popularity in the country, most of us do not know how it works. Let’s look at the steps.
- You sign up for a BNPL service by creating an account. Then, you link the desired payment method to this account.
- While checking out, you select BNPL as the mode of payment for the purchase.
- You wait for the chosen BNPL provider to perform a soft credit check before approving the transaction. It usually takes a few seconds.
- The merchant gets full payment from the BNPL provider for the purchase you just made. The product is yours now.
- You repay the BNPL provider in installments for a specific time. This tenure is agreed upon in the previous stages. With timely repayments, you get a chance to make an interest-free payment.
Through these easy steps, you can make a product or service yours without having to make the full payment upfront. The concept of Buy Now Pay Later did not appear overnight. Let’s find out more about the growth stages of BNPL.
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Growth and Popularity of Buy Now Pay Later
The market for Buy Now Pay Later is currently going through rapid growth. The BNPL market in the USA is booming as it is expected to go from $81 billion in 2023 to $124 billion by 2027. The CAGR, or Compound Annual Growth Rate, is approximately 15.8%.
The customer base is also projected to massively grow by 2027. The projected customer base will be 112.7 million, a huge growth from 82 million in 2023. This rise is greatly influenced by young consumers who prefer flexible payment options that do not require upfront payment.
During the pandemic, this urge multiplied, as more customers leaned towards online shopping. COVID-19 uncovered the barriers associated with physical payment in the worst possible way. Since then, BNPL has kept a steady growth pattern. This is projected to rise further, with more people opting for contactless payment methods.
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Benefits of Buy Now Pay Later
BNPL comes with ample benefits that make it more appealing to both businesses and customers. It helps both parties in various ways while boosting the economic growth of a country. Several key benefits are listed below:
1. Increased Sales
As Buy Now Pay Later allows customers to purchase high-value products without having second thoughts, it leads to fewer cart abandonments. The customers make more purchases driven by the flexible payment support from BNPL providers.
With increased purchasing power, the customers do not step back after checking out the price of their desired product. Hence, there is a significant increase in sales, which boosts the economic growth of a country.
2. More Young Customers
Young customers tend to have poor traditional credit access. Due to this, they are forced to look for flexible payment options. BNPL is considered a savior for them. With more millennials and Gen Z customers opting for Buy Now Pay Later as an efficient mode of payment, the customer base of BNPL providers is expanding significantly.
Financial boundaries are also a key factor that makes them opt for BNPL. It allows them to repay through investments conveniently, enhancing their purchasing power. Thus, BNPL helps to attract more young customers.
3. Improved Cash Flow
One of the key benefits of Buy Now Pay Later is improved cash flow. With the merchants getting full payments from the BNPL providers, they do not face the challenges associated with following up for delayed payments. Therefore, the merchants roll out more items that are payable with BNPL, allowing increased cash inflow. As the providers are taking care of the customer-related hassles, the merchants can solely focus on their revenue growth.
4. Enhanced User Experience
BNPL is preferred by new-age customers as it is less financially draining compared to the other installment-based payment methods. With Buy Now Pay Later, the online shopping experience becomes fun due to its easy accessibility. Buyers can get their desired item without paying a single penny upfront. With enhanced budget management, the user experience skyrockets. Customer satisfaction goes up, opening doorways to more BNPL-assisted payments.
Prominent BNPL Providers In The USA
With the rising demand for BNPL-assisted payments, the number of providers is also increasing significantly. Despite the presence of some new market players, there are several prominent BNPL providers who play pivotal roles in expanding the market of Buy Now Pay Later. Here, BrandLoom, a prominent e-commerce agency in Texas, gives you a sneak peek.
1. Affirm
Affirm was founded in 2012 and is available across 245,000 merchants in the USA. It has financed purchases worth more than $17 million. Depending on the user’s eligibility and repayment plan, Affirm offers interest rates between 0% and 30%.
2. Klarna
Some of the students from the Stockholm School of Economics collectively founded Klarna in 2005. This provider is presently available in more countries than its market competitors, making it one of the BNPL leaders. They charge no interest for a 30-day repayment plan. There are Pay in 4 plans where the interest rate ranges from 0-19.99%, and the loan tenure is up to 36 months.
3. Afterpay
Afterpay was founded in 2014 in Australia. After that, it expanded its operations across the USA, UK, and New Zealand. It is used by 122,000 merchants, collectively having over 19 million customers. They have zero interest rates, and their loan tenure is six weeks. Students can easily use this provider, which encourages responsible spending.
4. Zip
Zip, formerly known as Quadpay, was launched in 2013 in Australia. Here, the repayment is made in four installments. Zip is interest-free, and the loan tenure spans around six weeks. It charges a $1 convenience fee over each of the installments. Apart from online shopping, Zip supports in-store purchases, even for stores that are not in partnership with them.
5. Sezzle
This BNPL company was founded in 2016. Sezzle currently has 10 million customers who actively use its services. Besides, they have partnered with 48,000 merchants. It is a nonprofit or certified B Corporation firm that allows the rescheduling of installments at the user’s convenience.
Buy Now Pay Later Vs Credit Card
BNPL is giving tough competition to traditional credit cards, and many of us are still wondering how! Let’s look at some major differences between these two payment modes,
| Features | BNPL | Credit Cards |
| Credit Checks | No credit check or soft credit check | Requires a credit check with additional fees |
| Interest | Interest-free | Charges interest on the purchase amount |
| Approval Process | Easy approvals, especially appealing to new users | A stricter approval process can be challenging for some users. |
| Purpose | Short-term purchase support | Broader financial flexibility for long-term use |
| Impact on Credit Score | Does not impact the credit score | Can improve credit score with timely payments |
Is Buy Now Pay Later Payment Method Right For My Business?
Despite the rising preference for BNPL, especially among the new-age customers, there are potential risks associated with Buy Now Pay Later for businesses leveraging it as a payment option. You must consider these risks to understand whether you need BNPL or not to serve your customers.
1. Increased Transaction Costs
BNPL providers charge a certain amount to the businesses that incorporate their services in their operations. It can come as a flat fee or a certain portion of the total transaction. For smaller businesses, it increases their overall expenditure and makes an impact on their profit margin. Also, the incorporation of BNPL requires additional handling costs, such as customer support inquiries. Hence, Buy Now Pay Later can impose a financial burden on smaller vendors dealing with low-volume daily transactions.
2. Debt Accumulation
As the Buy Now Pay Later boosts the purchasing power of the consumer, they are encouraged to order more products through this payment mode. This behavior can result in multiple BNPL debts for a single user, thereby leading to issues with financial management. With many BNPL loans due to easy accessibility to this facility, it may lead businesses to incur debts that eventually become harder to cover. Hence, debt accumulation is a key issue.
3. Fraud Alert
As the BNPL is a new addition to the world of e-commerce, it is highly vulnerable to fraudulent activities. These offenders are likely to exploit this facility due to the lack of robust security practices in place. As the fraudsters misuse the newness of this segment, it can result in massive financial losses for the businesses. It is advisable to adopt proper security measures to keep such fraudulent behavior at bay.
4. Limited Understanding
As BNPL is a new payment mode compared to credit cards, debit card, personal loans, etc., most of the customers do not have adequate knowledge of its agreements. Lack of awareness regarding BNPL terms gives rise to confusion. It may further escalate to financial mismanagement due to failure to make payments on time, imposing additional burdens on the businesses. Hence, these knowledge gaps must be addressed to boost the overall functionality of Buy Now Pay Later worldwide.
BNPL Brands In India
Buy Now Pay Later has become popular in India. More people are opting for BNPL as it allows shoppers to make convenient and flexible payments via installments. Let us look at some prominent BNPL providers in India.
1. Amazon Pay Later
This is a BNPL service offered by Amazon to cater to its Indian customer base. Launched back in 2018, it enables eligible customers to make purchases on their eCommerce platform and choose partner merchants. This service has expanded beyond Amazon in 2021-22. Now, any partner platform using Amazon Pay UPI can avail of this service. This expansion has helped the provider to reach a broader customer segment and strengthen its market presence.
2. LazyPay
LazyPay, one of the key BNPL providers in India, started its operations in 2017. It is owned by Prosus (Naspers). They have expanded their operations and now offer a broader range of digital credit products, such as LazyPay Checkout, LazyCard, and LazyPay Limit. Since 2022, their focus has been on regulated checkout finance and LazyCard. The latter offers revolving credit that is connected with the unified PayU finance credit line.
3. Simpl
Despite being founded in 2015, Simpl started its BNPL service a year later. It has a unique one-tap checkout network mechanism. It is not a direct lender. Additionally, key features include Pay Later, with no interest or cost, a wide merchant network, and underwriting. At present, Simpl is one of the leading and most resilient BNPL providers. The users can pay within 15 15-day term and pay zero interest.
4. Slice
Initially, it started its operations as Slice Super Card as a PPI (Prepaid Payment Instrument). It was founded back in 2016. At present, it operates as a digital credit card platform under North East Small Finance Bank (NESFB), which it acquired in 2023. They offer Slice Super Card as a compliant credit card product. Previously, it had an open-to-all approach, which is now limited to the NESFB customers only.
5. Flipkart Pay Later
Flipkart is India’s leading eCommerce player, and it unveiled its BNPL service in 2017. The eligible users get a pre-approved credit limit to avail of this. It is primarily used to cater to Flipkart customers; now, Myntra customers can use it, too. Pay Next Month and Zero-cost EMIs make the repayment flexible for the users. The provider is now partnering with IDFC First Bank to ensure seamless operation.
How BNPL Is Impacting The Global Economy?
The new-age shoppers are mostly busy managing their personal and professional lives at once, keeping them away from refreshments like going out shopping. With families becoming smaller in size, new mothers find it difficult to visit physical stores to shop. The COVID-19 pandemic has also left a mark in this context, as individuals were locked down for months, forcing them to find an alternative to the physical shopping experience.
With the restricted social activities, individuals were forced to opt for online shopping. The pandemic turned old-school customers into tech-savvy individuals as they had no other option but to use digital platforms for making purchases and payments. Buy Now Pay Later has emerged as a game-changer for online shopping. Despite the providers charging a percentage of the total cost, it is still a winning situation for the businesses.
The flexible payment methods increase sales as individuals who cannot afford the item can also buy it and then repay it in installments. The interest-free repayment and lower credit checks allow more customers to lean towards BNPL loans. As individuals get more time, they can purchase items that are beyond their limit if they want to make the full payment. This increases the buying power of the customers, resulting in more sales and a well-performing economy.
With BNPL use on the rise, more businesses were interested in integrating it into their e-commerce sites. They wanted to upgrade their payment modes so that the new-age customers did not leave them for a certain competitor just because they did not get Buy Now Pay Later instant credit. This payment option massively increased the cart size compared to the pre-BNPL era. This reflects the positive impact BNPL has had on the global economy.
Challenges For Small Businesses To Access Formal Credit To Support Business Expenses
There is no greater joy than becoming an entrepreneur. Also, there is no greater worry if you own a small business with a lower budget to cover the initial operational costs. Buy Now Pay Later can be a savior for small business owners by helping them overcome the challenges of accessing formal credit for initial support. Let’s have a look at the common issues faced by them in this context.
1. Limited Credit History
As the new businesses mostly lack sufficient documentation to prove their creditworthiness, it may limit their access to formal credit. Therefore, small business owners often struggle to secure financial support, such as traditional loans, for their ventures.
2. Lengthy Processes
For new entrepreneurs, time is equivalent to money. They must act fast to keep their venture running. However, accessing formal credit requires a lengthy application process followed by time-consuming approvals. Hence, the new businesses are unable to follow this traditional method and often back out, fearing losses.
3. Strict Eligibility Criteria
Traditional loans come with stringent eligibility requirements, which small businesses struggle to comply with. As the new ventures do not have adequate financial documents or transaction data to share with the lenders, they find it difficult to get clearance for formal credit.
4. Higher Costs
The high interest rates and additional fees associated with formal credit options may burden small ventures with financial liabilities. This can impact the profit margin, ultimately taking a toll on their economic health.
5. Risk Aversion
When it comes to traditional lenders, such as banking institutions, they tend to prefer larger clients over smaller businesses. Strong credit histories and steady cash inflows from big firms influence this preference. Therefore, small businesses take a backseat in getting formal credit.
How To Maximize The Benefits Of BNPL
A long-term BNPL loan may burden you with additional financial liabilities. This will continue to increase if you are not attentive to your installments and frequently miss them. Therefore, you should be aware of the tips and tricks to utilize Buy Now Pay Later apps more efficiently and maximize their benefits.
- Keep it for targeted purchases so that you don’t end up buying something non-essential. Short-term loans will be ideal for BNPL, as you will get interest-free or low-interest loans depending on the purchase.
- You can align your cash flow with the installments by calculating the proper timing to make the purchase. Choose a date that follows your income cycle so that you are never out of funds.
- Urgent purchases are encouraged with Buy Now Pay Later in EMI rather than luxurious non-essential items. This helps to cover up the sudden expenses while leaving no room for the unimportant ones.
- Avoid overextending your budget when buying anything using BNPL as a payment method. Exceeding your credit limit may lead to repayment challenges later on, resulting in spending more than the loan amount.
- It is advisable to read the loan’s terms and conditions before proceeding. Different providers have different regulations for BNPL loans. Closely following the documents can make you aware of the hidden charges.
- If you are using Buy Now Pay Later instant credit for business expenses, opt for business-focused BNPL providers rather than customer-focused ones. These providers offer longer repayment timelines and higher credit limits to accommodate bulk requirements.
- You must prepay if your provider offers this option. It allows you to manage your finances effectively while reducing the repayment timeframe.
How To Choose The Right Buy Now Pay Later Provider?
There are certain steps that lead to the selection of an ideal BNPL provider for your business. Let’s explore those.
1. Need Assessment for The Right Buy Now Pay Later
The primary step is to assess your needs. For instance, your preferences for credit limit, repayment timeline, interest rate, etc. This is the base of your search process, as you will look for BNPL loans that align with the outcomes of your needs assessment. A poorly conducted needs assessment may lead to poor quality of outcomes.
2. Business-focused Providers
As it is known that the features vary from one business to another. If you are a new business and seeking a reliable BNPL provider, you must choose one of the business-focused providers. These providers aim to provide adequate support to new ventures, ensuring you receive comprehensive financial support for your small business.
3. Cost Comparison of The Right Buy Now Pay Later
It is essential to compare costs to ensure you stay within your budget. Providers offering maximum perks at a reasonable price should be considered to maximize the benefits of the BNPL loan. Cost comparison is important because if you spend beyond your limit, you may face challenges with repayment.
4. Repayment Options of The Right Buy Now Pay Later
You need to assess the repayment options to ensure the highest level of payment flexibility without paying excess hidden charges. For instance, some providers have a repayment timeline of 60 days, while others offer a flexible payment plan of 90-120 days. Also, you should enquire about returns and refunds. For instance, the process and timeline for returning an item purchased using Buy Now, Pay Later (BNPL) as a payment method.
5. Credit Reporting Structure of The Right Buy Now Pay Later
Your chosen provider must follow strong credit reporting practices. If you pay on time, such a provider will report the payment to the respective bureaus, which will help increase your credit score. This will help you with your future purchases and make you eligible for most of the loans. Therefore, the reporting structure must be appropriate to ensure your timely repayments do not go in vain.
6. User Experience & Provider Reputation
Before finalizing a BNPL provider, it is essential to conduct thorough background research to determine their market reputation. Additionally, it is advisable to seek out reviews and testimonials. These help to get an idea about the overall performance of the chosen provider. You do not want to unknowingly waste your hard-earned money on a firm that is notorious for bad service provision.
7. Regulatory Compliance
The shortlisted provider must comply with the relevant regulatory frameworks. Otherwise, you may not want to go with them. Poor adherence to regulations may complicate the process for you, potentially resulting in higher expenditures than expected.
8. Negotiate Terms with The Right Buy Now Pay Later
You should negotiate the repayment timeline if you feel everything else falls into place. Trial periods can be negotiated, too. BrandLoom, the best e-commerce agency in Texas, can help integrate BNPL payment options for optimum user convenience.
9. Customer Support & Scalability
The service providers must be capable of scaling with your growing business. Additionally, 24/7 customer support is available in case you encounter challenges with your installments. Active and responsive customer support helps to gain client trust.
Businesses Or Customers – Who Ends Up Paying More In Buy Now Pay Later?
When it comes to BNPL, it is a complex platform where either party can sometimes end up paying more than the other. Now, who will pay more depends on the circumstances. Let’s find out to ensure you are not the one who ends up paying more, whether you are an entrepreneur or a customer.
1. When The Business Pays More
Businesses need to cover some extra costs with BNPL transactions. However, they eventually rise above it with the incoming sales flow.
- Transaction Fees: The Buy Now Pay Later providers receive hefty merchant fees from every transaction. This cost can range from 2% to 8%, depending on the provider. This is higher than the average credit card fee.
- Integration Costs: While businesses set up BNPL at the initial stage, they need to bear certain operational and technical costs. It can impact the financial backbone of smaller vendors who are looking to enter a broader market.
- Cash Flow Risks: In case of non-payment from the customers, cash flow forecasting can get complicated. Hence, high adoption of Buy Now Pay Later is likely to strain businesses.
2. When The Customer Pays More
Consumers are the ones who mostly bear the brunt of varied charges imposed by the Buy Now Pay Later providers based on the different contexts.
- Late Fees: In the event of missed payments, customers are imposed late fees. This fee can vary from provider to provider and can go as high as 25% of the product price.
- Interest: Although BNPL offers interest-free loans, plans with a longer time frame may come up with interests as high as 34%. So, the customers end up paying a lot more than intended.
- Higher Spending: With convenient payment options like BNPL, customers tend to spend more than intended. This increases their loan amount, eventually burdening them with unnecessary debts. This tendency is more common among the younger consumers. They usually do not take timely payments seriously, accumulating further debt on Buy Now Pay Later Apps.
- Hidden Costs: There are some Buy Now Pay Later providers who charge additional fees, like rescheduling fees or installment fees, increasing the financial burden for the customers.
Conclusion
In today’s world, individuals are striving to make the best living. Budget constraint is a major concern that keeps them from purchasing many products they desire. With easy short-term repayment options, BNPL is being considered a key financial tool for everyone, especially younger consumers who lack access to traditional credit cards. Hence, the incorporation of BNPL is a must to boost your profit margin.
With Buy Now Pay Later, they can make purchases without making a hole in their pocket. While customers may end up spending more, businesses can make up for their losses with the income from sales. Additionally, the rising number of BNPL providers is indicative of a growing trend. Hence, boosting awareness is a key practice that can help more consumers become wary of the benefits of BNPL and transform the way they shop!
FAQs
Lack of affordability is a common reason behind abandoned carts. Buy Now, Pay Later (BNPL) is a flexible payment option that allows customers to pay for a product in short-term installments. This enables the buyers to purchase a product from an online merchant without having to pay the full amount upfront. As the BNPL provider fully pays for the product, the buyer does not have to do anything with the merchants here. Until all the installments are paid, customers stay connected with the BNPL provider only.
While mostly these are interest-free, in some contexts, customers might have to pay additional charges. For example, penalties associated with missed repayments. The eCommerce sites can integrate BNPL as a payment option to boost conversions and increase revenue. As India’s top eCommerce service provider, we at BrandLoom can help you to integrate BNPL to your e-store and maximize sales.
In most cases, BNPL providers conduct soft credit checks before approving the payment. This type of credit check does not make any impact on the buyer’s credit score. It mainly focuses on understanding the buyer’s behavior through their past payment histories. However, sometimes, the providers conduct hard credit checks, which can have a negative impact on the buyer’s credit score.
BNPL is a great way to boost one’s credit score. It is advisable to make on-time repayments as it can help to improve credit scores. In the meantime, missed payments can affect the score. Hence, it is important to ensure you never miss any payments. BrandLoom can help your business grow by incorporating BNPL in your e-commerce website.
With the soaring demand for flexible payments, Buy Now Pay Later apps are gradually gaining popularity. In India, BNPL has become a great choice while paying for unaffordable yet useful items. Some of the best Buy Now Pay Later apps in India are Slice, Amazon Pay Later, ZestMoney, Simpl, Flipkart Pay Later, and LazyPay.
Amazon Pay Later and Flipkart Pay Later are specifically functional for e-commerce tycoons Amazon and Flipkart, respectively. With Flipkart Buy Now Pay Later, one can get an instant credit of Rs. 1,00,000. BNPL providers like Simpl and ZestMoney offer zero-interest repayments on multiple platforms. You can get instant credits and rewards with Slice. LazyPay offers an easy credit facility to its users. Let BrandLoom revamp your e-commerce site with BNPL as a payment option.
Amazon is a top global e-commerce platform that has millions of products under its wing. Amazon Buy Now Pay Later is known as Amazon Pay Later, which can be used only for purchases made from this e-commerce site. To avail of this facility, one needs to have an Amazon account. Otherwise, you can register yourself as a new Amazon user.
Then, you need to pick a product and add it to the cart. When you are checking out, you will get payment options. There, you have to choose Amazon Pay Later as the desired mode of payment. The EMIs can be chosen from 3 to 12 months and within your credit limit. You can also make the full payment in the subsequent month. BrandLoom can help your business collect more revenue by introducing BNPL as a payment option.
One of the key reasons behind the growing popularity of Buy Now Pay Later apps in the USA is zero interest. The providers allow you short-term, interest-free loans while you purchase from their platform. You have to give 0% interest on your purchase if you decide to pay the full amount within the stipulated interest-free period. This can be up to 45 days, depending on the provider you choose.
However, a longer repayment time will increase interest. The rate is still lower than that of the credit card loans. This amount further increases if you miss your installments or pay late. Hence, it is important to ensure you do not miss any payments and are on time.
The only way to keep your business standing tall in this highly competitive market is to adopt the new trends and upgrade yourself accordingly. As for the Buy Now Pay Later, it is currently being widely adopted by various businesses worldwide. However, if you are thinking of incorporating the BNPL payment system into your business operations, you must consider certain key points to make sure you do not face losses.
BNPL requires businesses to pay various charges that result in higher expenditure for them, e.g., merchant fees. Therefore, you must evaluate the tentative costs and compare them with your budget before investing in BNPL. If you are a small business, BNPL might affect your financial health with all these extra costs. BrandLoom, the best e-commerce agency in the USA, can help your business grow in no time.
With the rising demand for Buy Now Pay Later apps in LA, more businesses are leaning towards this payment method to attract new-age buyers. As BNPL is a flexible payment option that allows its users to repay their loans with zero or minimal interest for short-term purchases, young customers are opting for this plan. Also, credit cards have been allowing customers to buy their desired items without paying anything upfront. Hence, a collision is likely to happen between these two, as you keep wondering who will replace whom.
As the BNPL is a new trend, it is likely to emerge as a popular method among youngsters. However, credit cards are largely adopted by mature individuals who are well-versed in their finances. Due to this, credit card users may not accumulate as much debt as BNPL users. Also, both of these payment plans serve different categories of customers. Therefore, BNPL will not replace credit cards. Rather, they will serve their respective purposes linked to their distinct customer base and stay in their unique places.
Credit score impacts the efficiency of Buy Now Pay Later services. As most of the BNPL providers do not conduct hard credit checks, you can apply without worrying. Even if you have bad or no credit, it will not have any impact on your application. However, there are some providers who are likely to report to the credit bureaus about any identification of missed payments. If this ends up in collections, it will drag down your credit score further for an extended period. It will become difficult for you to apply for any other loan that you had planned previously.
A poor credit score can affect your financial planning and keep pulling you in a downward direction. Even if you manage to get a loan with bad credit, there will be some limitations based on your previous failed payment records. Your spending limit is likely to be low. Some lesser-known providers may give you a loan with poor credit. However, it is better to stick to the high-end providers for a more effective outcome. If you make on-time payments, your score can improve, allowing you to recover from your downfall and get under a trusted provider for a long-term relationship.
The primary objective of BNPL providers is to boost customer buying motivation. They help to curb financial risks that come with similar payment options. Through effective partnerships with the BNPL providers, the merchants integrate this payment mode into their system. Upon selecting the Buy Now Pay Later service during checkout, the concerned organization quickly runs a credit check before approval. Afterward, the provider pays the full amount to the merchant and confirms the order. The customer pays the provider through installments based on their convenience. The applicability of interest depends on the chosen repayment plan and product price.
This is a convenient choice for the merchants as they are getting the full payment upfront from the BNPL providers. Hence, whether the customer misses the installments or fails to pay does not concern them. Any further disputes are to be settled by the agency and the customer. Therefore, the merchants are at no credit risk. Meanwhile, the merchants have to bear a transaction fee, which does not make a significant impact on their finances. Besides improving the cash flow due to instant payments, the best Buy Now Pay Later services boost sales and help with customer acquisition. They comply with consumer protection laws and maximize marketing impact.
Sometimes, you come across the product you have been looking for a long time. However, despite the urgency, you cannot purchase it due to financial limitations. Buy Now Pay Later service enables you to buy your favorite product without paying the full amount upfront. It lets you pay the price in interest-free installments for the utmost convenience of the buyers. A small interest may be charged based on factors like spending limit, installment numbers, timeframe, credit score, etc.
Anyone can be eligible for it, as most BNPL providers conduct soft credit checks, which almost everyone passes. However, if the applicant has a past history of missed payments, a hard credit check can land them in trouble. It will affect their credit score and keep them from opting for any other loan for several years. If the customer cannot pay upfront, they can look for Buy Now Pay Later in the eCommerce platform they are buying from. If you own an eComm store and are planning to integrate BNPL as a payment option to expand your customer pool, BrandLoom is the ideal destination.
There are certain risks of using guaranteed approval Buy Now Pay Later for both consumers and merchants. As for the consumers, BNPL is a convenient payment mode due to the soft credit checks conducted by the providers. As for the merchants, they have to pay transaction fees on every purchase made through the Buy Now Pay Later. It lowers their profit margin and makes a collective impact on the annual revenue.
Customer ownership is managed by the BNPL providers instead of the merchants, preventing them from enjoying loyalty benefits. If the provider’s image is affected, it continues to affect the merchant’s overall reputation as well. Refunds from the providers may take time, making a negative impact on the cash flow. If you are looking forward to incorporating the BNPL payment option in your online store, BrandLoom is the right agency to approach.
While purchasing an item, the buyers first look for the prices before going ahead with the sale. They check whether the product is in their budget. A great number of products are left unsold because most of the buyers cannot afford to make upfront payments. As a result, businesses face huge losses. Buy Now Pay Later is useful to complete these purchases through flexible repayment options, which too interest-free.
As BNPL is slowly taking the place of credit cards, businesses nowadays are focusing on introducing this payment mode for their products or services. Some of the well-known Buy Now Pay Later Apps are Affirm, Klarna, Afterpay, Splitit, and PayPal’s Pay in 4. These flexible payment options are ideal for increasing product purchases and boosting the revenue of business organizations. If you want to boost sales on your site with BNPL, BrandLoom can assist you with that.
