“Buy now, pay later” (BNPL) is one of the fastest-growing payments options that is skyrocketing in popularity today. It is similar to the layaway concept that was used by many department stores in the past.
Here is a list of reasons to offer the BNPL option:
1. Attract New Customers
Offering BNPL helps attract new customers and encourages them to make the first purchase. Price is one of the biggest psychological barriers for buyers. For this reason, they abandon over $18 million worth of goods in online shopping carts annually.
2. Higher Average Order Value
The Average Order Value is the average amount a person pays when they buy something. Many vendors and online shops have seen as high as 130% increase in the Average Order Value after implementing BNPL. Numerous studies have shown that many people use this option in order to avoid credit card interest.
3. Improve Customer Experience
The BNPL option improves customer experience. With the help of this option, they are given more control over their buying decisions. BNPL is an excellent flexible payment system that empowers customers.
4. Build Trust
BNPL can make purchases with less commitment up-front, which increases customer trust and improve customer experience. Implementing BNPL helps merchants develop growing relationships with consumers. Once consumers get familiar with a merchant, they start to trust them.
5. Increase Customer Lifetime Value
Consumer Lifetime Value is the total amount a person spends at a store over their lifetime. Earning new customers is getting more and more expensive. In the last five years, it has increased by over 50%. The BNPL option allows customers to extend their payments over their lifetime and helps improve customer retention rates.
6. Make Shoppers Purchase More Often
The BNPL option means shoppers do not have to pay the full amount upfront, which gives them financial flexibility and increases the number of purchases in the long run. Moreover, BNPL also allows shoppers to buy expensive items easily, instead of saving up in order to buy them.
7. Keep Up With the New Trend
Consumer demand for BNPL keeps growing, so it is definitely worth offering it as a convenient and flexible payment option. Recent studies have shown that Millennials and Generation Z prefer the BNPL option over other payment options because it gives them financial flexibility with zero interest payments. Recently, over 26% of Millennials and almost 11% of Generation Z shoppers have used BNPL to finance their purchases. It is possible to say that BNPL is becoming a preferred option of checkout for younger generations.