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As the name implies, buy now, pay later (BNPL) is a payment option that enables customers to take their preferred products at home. The best part is that they do not have to pay cash all at once. Users can pay in installments using this particular service.
These installments are usually managed by third-party service providers such as Afterpay or Klarna. Similarly, the popularity of “Buy Now Pay Later Furniture” is also increasing these days.
Are you thinking that you do provide credit card payment, which is more or less the same thing? You're not the only one who feels this way. Although a credit card is not a bad choice, you should note that many individuals avoid it due to high-interest rates.
Due to this particular reason, BNPL is gaining traction as a viable option. 39.3% of the consumers who don't want to pay credit card interest utilize BNPL.
So, it is high time for you to effectively examine your different payment choices. This method is ideal for individuals who do not have a debit or credit card (as is the case with the younger generation) and who want a particular repayment date.
In this blog post, we'll go through the buy now, pay later services in detail, and how to integrate them into your business. Also, you will get to know how the “Buy Now Pay Later Furniture” checkout options can prove to be very helpful for your consumer.
Let's get started!
Table of Contents
How Does The Buy Now Pay More Works?
Let's say your brand makes use of 3rd party Klarna to provide a buy now, pay later option. A customer selects this payment option during the checkout process. Klarna provides three options:
- Pay later after 30 days, in full.
- Pay later Instalments into three or four equal, interest-free installments.
- Finance it, splitting the cost of bigger purchases into as many as 36 monthly installments. In this regard, you may have to pay interest charges.
In addition to that, you need to pay the provider a 2 to 6% commission plus a fixed charge for each transaction.
Entering Customers In A Contract:
Essentially, this approach works by entering customers into a contract that binds them to pay the principal as well as interest. It's not like those old days when you must go chasing for the individual who owes you money.
In this case, the provider of the buy now, pay later service is responsible for getting the money. Before approving the application, BNPL providers consider doing a soft credit card check, which means they may check the customer's credit card score.
It disapproves of the application in a case, the score is not good. Secondly, providers consider avoiding the users who have a general disdain for paying back their debts.
Whenever it comes to interest rates as well as pricing, some BNPL providers contribute to offering a fixed rate, while others charge depending on the purchase price.
In case, the user does not make the payment on time, the vendor may charge prepayment fees or late fees.
Online And Offline Transactions:
Online stores are where the majority of buy now, pay later online transactions to take place. This option is available at certain brick-and-mortar stores.
In this instance, the retailer gets the user to scan a QR code, and the retailer tends to receive credit from the provider within the specified period.
Let's take a look at this procedure from your customer perspective. Suppose a user named A likes a product from your shop and proceeds to the checkout page. He/she has the option of taking the product home without having to pay the whole price.
And it's this concept of not giving away too much money all at once that will open up new doors for your company, whether it's in terms of new visitors, sales, or conversion.
Major Reasons Why Retailers Focuses On Offering Buy Now, Pay Later
This trend will only continue to grow, and it is already well-known among users. Are you aware that 37.6% of customers have already utilized a BNPL service?
In fact, according to a survey, more than one-in-three in respondents had already utilized a BNPL service for making a purchase. To meet this demand, internet retailers have begun to offer buy now, pay later options. Let's look at why everyone is making this shift.
- Attract millennials to your company
- Boost in sales
- Customer loyalty
- Improving the user experience
How To Consider Implementation Of Pay Later Option In Your Store?
The first step is to locate a BNPL service provider.
Well-known platforms that provide buy now, pay later services to include Zip, Afterpay, Openpay, Payright, Humm, and Klarna.
Afterpay: While making an online purchase, customers can select Afterpay as their payment option. They have 8 weeks to pay the money back in four installments, with no interest if they pay all the interest on time.
In case, the payment is still unsuccessful, customers will be charged a $10 late fee by Afterpay. If they do not pay the payment within the next seven days, they will be charged an additional $7.
Zip Pay: Users can choose to pay weekly, monthly, or every two weeks, after choosing Zip Pay as their payment option at checkout. Zip Pay imposes a $6 monthly fee if the user does not pay by the month's end.
Klarna: Klarna is regarded as one of the most recognized platforms, with 80 million customers in 17 countries. It allows users to pay for purchases in four interest-free installments.
In this case, the first installment is paid whenever the merchant confirms the order, and the next three installments are charged automatically every two weeks.
If a customer misses a payment, he or she will be charged a $3 late fee for purchases below $100 as well as a $7 late fee for orders above $100.
LayBuy: Users need to make payment in six weekly payments. If you don't pay on time, you'll be charged a $10 late fee.
Humn: Users can apply for up to $30,000 with terms of up to 60 months. For periods of 2.5 months or less, the provider charges no monthly fee, while for terms of 5 to 60 months, the supplier charges an $8 monthly fee.
Important Features Which Every Buy Now, Pay Later Provider Offers
Every buy now, pay later supplier offers the following features.
· Loan Term: The term of the loan varies based on the provider. Loan terms for small purchases can range from a few weeks to up to 6 months. Users can pay for larger purchases for up to 2 or more years.
· Purchasing Power: Providers focus on offering loans ranging in price from $35 to $30,000. However, it can vary. Customers pay back the credit in monthly payments, whereas merchants pay back the credit in four installments.
· Convenience: All service providers focus on providing a seamless experience. The user may apply for a loan and get it in a matter of seconds. Furthermore, the whole application, as well as the loan management procedure, is completed online.
· Wide Acceptance: Every provider accepts a variety of credit debit cards. Furthermore, the line of credit products does not have an expiration date. The card can be used again.
You need to consider the following factors before selecting a provider.
Integration: Ensure that the supplier you select can work with your current POS system. The user will have a seamless checkout experience as a result of this. Second, the integration will decrease the amount of manual labor required.
Fees: Most buy now, pay later businesses to charge a fee for processing payments (% of purchase price + transaction fee). Investigate the prices charged by various suppliers and after that, choose the one that best fits your needs.
User Base: Look for a provider with a large as well as reputable user base. Customers will flock to your shop if you partner with a well-known provider.
The next step involves post-implementation marketing.
You should start encouraging your customers to utilize the method after you've chosen a supplier as well as implementing the payment option in your shop. Make an official announcement to get your consumers' attention.
You can easily contact your existing customers can be contacted through email to learn more about purchase now, pay later as well as how it might benefit them. Also, you can share the information on social networking sites.
Secondly, you can disseminate information by placing informative banners or icons on your website, as well as product images.
Some buy now, pay later companies to possess directories that list the retailers who accept their payment method. You can submit your information to your provider's directory. So, in this way, you'll be able to find new consumers.
The world of eCommerce is evolving, and so are payment options. More the customers are opting to buy now, pay later than ever before. BNPL choices are your greatest bet if you want to attract this growing audience.
I am sure, this guide has proved to be very helpful for you if you are looking for Buy Now Pay Later Furniture option.
About the Author: Allison Janney is a Sales & Marketing Manager at ChargeAfter. She would like to share content on Finance Industry like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable reader.