Buy now, pay later (BNPL) has consistently been picking up steam for the past decade. Then, COVID-19 happened — and like so much else in the world of e-commerce, BNPL graduated from a passing trend to a permanent consumer preference.
The flexible payment solution works like this: At checkout, customers opt to pay over time with a BNPL provider. This splits the total cost of their purchase into a handful of payments (usually, four to six) over a period of several weeks or months. They pay the first payment at checkout, hit “Pay Now,” and their order is submitted.
While the customer only pays the initial installment upfront, the BNPL provider covers the remainder of their purchase, so the merchant is made whole immediately. The merchant then processes and ships the order like any other.
For shoppers, BNPL offers the flexibility of being able to spread out the cost of a purchase, while receiving it just as soon as if they had paid entirely upfront. For merchants, it offers even more benefits — like the ability to bring in new customers, more purchases, and higher Average Order Value (AOV) — but without any of the risk.
What’s not to love, right? And that’s just the beginning. Read on to learn more about the sizable benefits BNPL can offer your e-commerce store.
5 Big Benefits of BNPL
BNPL has slowly but surely been eating up market share for years. Since the pandemic, BNPL growth has skyrocketed. The benefits below explain why.
Benefit #1: Bye, Bye Credit; Hello Flexible Payments
There is an overall shift among today’s consumers away from traditional overseas chinese in uk data credit toward alternative payment solutions.
In a recent survey that asked millennials, “What does financial success mean to you?,” 60% responded “being debt-free.” Younger shoppers, including millennials and Gen Z, are increasingly wary of credit cards and their potential to rack up debt. The average age of a credit card holder is now around 50.
Instead, these shoppers prefer flexible payment options like BNPL. In fact, BNPL’s versatility is one of its main selling points to shoppers of all ages, with 44% of shoppers choosing it precisely because it offers more flexibility than credit cards.
As these shoppers age into representing a larger share of the consumer pie, millennials and Gen Z are driving major changes across retail. But it’s not just younger shoppers adopting BNPL — their parents and older friends are, too. Nearly one in four Gen X shoppers uses BNPL to avoid using credit cards. Among boomers, BNPL usage doubled over the past year, with 40% now having used the service.
With flexibility and debt wariness driving shoppers, BNPL is the clear solution for retailers looking to stay competitive in a changing retail environment.