For a lot of consumers, the convenience of buying now and paying later for services is attractive. The idea of not having to worry about finances until after the purchase is made sounds like a dream come true. Unfortunately, there are some serious implications to consider when using this payment method in eCommerce. Credit cards were occasionally chosen and regarded as the main source for deferred payment choices. But Buy Now Pay Later is gradually displacing it. Nowadays, the majority of startups as well as e-commerce platforms like Amazon and Flipkart provide the Buy Now, Pay Later option. Users can now buy things in advance and pay for them later thanks to this.
It’s Changing the Game for Ecommerce Retailers
BNPL is changing the way customers buy products online. With this payment method, customers are more likely to make impulse purchases. This is a big change for retailers, as it means they need to rethink their entire marketing strategy. People’s spending power has increasingly expanded as a result of accessibility as well as the zero-interest BNPL model, particularly during festivals. It is simpler for clients to purchase bulky appliances and devices when payments are made in installments.
It’s Driving More Traffic to Retailers
Since BNPL is a payment method that is convenient for customers, it’s driving more traffic to eCommerce retailers. In fact, according to Statista, the number of transactions made using BNPL cards has tripled in the past three years. These kinds of schemes attract more customers, especially during festive seasons.
Apart from some negative drawbacks, BNPL has some positive effects for customers as they get fast approval on any services or products they want to purchase. A credit application is a quick and simple process. Customers don’t have to wait long for clearance because it happens instantly, and the likelihood of rejection is far lower than it is for other options like personal loans.
No Interest Rate
The majority of credit cards accrue interest on your outstanding monthly amount, which can be greater than 20% based on your APR. You normally don’t have to pay the interest on your installments with the majority of BNPL services which makes it a hassle-free service.
Creates More Debt
The first issue is that buying now and paying later can create more debt. If a consumer spends $100 on a product and pays off the entire purchase with a buy now, pay later plan within two months, they’ve spent $200 in total without putting any money down. That’s not only more expensive than if they had just paid for the product outright, but it also creates an ongoing debt that needs to be repaid. So eCommerce retailers must find effective ways to tackle this.
Sometimes Lead To Fraud
Additionally, buy now, pay later schemes can lead to fraud. If a company offers a buy now, pay later option for products that don’t actually exist or are overpriced, customers may be tempted to take advantage of the scheme. In some cases, this has led to companies being sued for fraudulently inducing customers into buying fake products.
It Can Affect Your Sales
Since BNPL can lead to impulse purchases, it can also have a negative impact on your sales. This is especially true if you don’t have a flexible payment plan in place.
You Need to be Prepared for Changes
If you’re an eCommerce retailer, you need to be prepared for the changes that BNPL is bringing. Make sure you have a payment plan in place and that your website is designed to accommodate this payment method.
With the increasing popularity of buy now, pay later (BNPL) credit and debit cards, it’s no wonder eCommerce retailers are feeling the heat. BNPL is a payment method that allows customers to pay for an item in installments over time, with the option to pay off the entire purchase at once.