Unless you’ve been living under a rock for several years, you won’t have missed the popularity and explosion of buy now, pay later on websites across the internet. The boom in popularity of buy now, pay later has seen new players enter the e-commerce payments market, such as Klarna, Laybuy and Clearpay, and existing providers such as PayPal diversify to serve this market.
But what does buy now, pay later offer your e-commerce business and should you take the time to implement new buy now, pay later payment options on your website? Actuate has all the answers…
What is buy now, pay later?
Most of us are familiar with buy now, pay later, once reserved exclusively for the likes of sofa warehouses and kitchen installers, buy now, pay later offers consumers the flexibility to pay for goods after taking delivery of them, usually in instalments.
Like credit cards, buy now, pay later in the literal sense allows consumers to buy an item and pay for it later. Credit is either offered by the e-commerce retailer directly (Amazon does this on Amazon manufactured items) or via a third-party such as Klarna or PayPal using their PayPal Credit product.
How does buy now, pay later work?
For e-commerce websites opting to offer buy now, pay later options, the general aspects are very similar to accepting credit card payments. When a consumer chooses to checkout and selects buy now, pay later, they often enter into a contract with a third party such as PayPal or Klarna to pay the balance and any interest over a set period of time. For you, the retailer, nothing changes, and you receive the payment in full, minus any service fee, from the payment provider, and the onus is on them to chase late or non-payment.
For the payment provider, money is often made through interest charges, and late payment fees levied on the consumer.
Reasons to add buy now, pay later to your e-commerce website
It’s easy to see the attraction of buy now, pay later for consumers, but why should you add buy now, pay later options to your business website? Below we’ve listed the major advantages buy now, pay later payments can bring to your business.
- Increased Average Order Values
You’re customers usually shop to a budget, but with buy now, pay later, the option to place higher value orders or shop for more significant, higher value items is opened up and becomes an option. A report by PayPal showed that the average order value on websites offering consumer credit options rose by 15% on average, with 93% of first-time consumer credit users saying they would use consumer credit again.
- Increased Conversion Rates
A survey featured on the BigCommerce blog revealed 30% of shoppers using consumer credit stated they wouldn’t have purchased at all if the retailer hadn’t have offered financing options. This statistic alone underlines just how strong an incentive buy now, pay later can be.
- Increased Customer Loyalty
Offering a buy now, pay later option on your website promotes a better customer experience; this, in turn, translates into increased customer loyalty and a positive brand image.
- Increased Customer Lifetime Value
More flexibility and control for customers brings with it a more positive user experience at your e commerce site. These positive interactions with your brand will help bring consumers back time and again safe in the knowledge they can buy now and pay later for their next big-ticket purchase.
Buy now, pay later is big business; if you’re not on board with it, then you could be missing out. Integration of buy now, pay later isn’t tricky, and a reputable digital agency like Actuate can talk you through the options available to you.