In the highly competitive world of e-commerce, offering customer flexibility is key to success. While some merchants may think of flexibility as accepting multiple card vendors or providing several shipping options, diving even deeper into payment solutions can be the difference between clinching a sale and cart abandonment. Particularly, offering new payment options like Buy Now, Pay Later (BNPL) is a growing trend especially compelling to Millennials and Gen Z. Even more enticing for merchants is its ability to increase total conversions and sales.
Discover how BNPL can integrate into your site and elevate your business against competition.
What is BNPL?
As indicated by the name, Buy Now, Pay Later is a way for customers to break down their cart’s total price into a series of smaller installments to be paid over a set period of time. Most BNPL require a minimum cart cost, such as $35-$50. Additionally, payback timelines can differ from merchant to merchant, such as three to six months for repayment. One particular reason BNPL has become so popular is because of its pricing transparency and lack of interest payments.
The Biggest Business Benefits of Using BNPL
The checkout process is not just a singular step at the end of a shopping trip, but a part of the larger journey that should be considered and evaluated accordingly. BNPL is a critical tool that opens up a world of benefits for businesses to continue to grow their annual performance.
1. Increase Conversions
There is no way around it, the most important factor for businesses to succeed is finding ways to add incremental sales every quarter. Rather than immediately jump to complex solutions, one fairly simple method to increase sales is adding BNPL. In particular, Capital Markets has found online retailers that leverage this option raise their conversion rates by 20-30 percent. This is most likely because it removes any “sticker shock” consumers may feel over pricey items and their total cart size. Additionally, it allows larger purchases to be attainable to those without the means to support a large single payment.
2. Attract New Customers
While increased conversion rates alone are enough to convince most merchants to expand their offerings, BNPL also opens businesses to new customers. In particular, BNPL is an attractive option to young shoppers who may not have strong credit or large spending limits. A 2021 study found that 52 percent of consumers 18-24 have already used BNPL at least once as part of their online shopping. As tech-forward Gen Z continues to grow in population size and financial independence, offering payment solutions accessible to their demographic will be highly competitive against traditional options.
3. Increase Cart Size
Not only does BNPL increase the number of total purchases, but it also has been shown to increase the average order value at checkout as well. These final totals are by no small amounts either. Studies have shown it can increase cart size from 30-50 percent! While there are a variety of reasons for this increase, one prevalent cause may be the customer’s need to reach the BNPL minimum threshold to qualify for installment payments driving them to add more to their cart.
How Businesses Can Leverage BNPL
While BNPL can sound like an additional step that may hinder customers, payment providers have made strides to keep these features as seamless as typical checkout. Popular and reliable payment gateways such as PayPal and Stripe offer frictionless pay-later solutions to keep customers hooked through final checkout.
Adding BNPL options does not have to be difficult or stressful for business owners either! Those using WooCommerce on WordPress can quickly and easily integrate PayPal, Stripe, and Braintree to your checkout flow with Payment Plugins. Our trusted plugins do not require advanced coding experience and are designed to get merchants up and running in no time, with expansive checkout options such as BNPL.