Guest Post: Everything You Need to Know About Buy Now Pay Later to Boost Sales
The Buy Now, Pay Later option is one of the hottest trends in payments for eCommerce, and it gives customers the chance to purchase products before they are sold out.
The second option, undoubtedly, appeals to the consumers better. For one, it makes the $100 item more “affordable” by converting the payment into three batches of $33-something. While the consumer still pays $100 for it, the instantaneous cost to them is the $33 they are required to pay now to buy the item.
The power of Buy Now, Pay Later is the illusion of affordability.
Your business suddenly has access to a new class of consumers who couldn’t afford an item. With Buy Now, Pay Later, you have a chance of making a sale where it wouldn’t have been thinkable earlier.
To better understand, global commerce would be executing a full quarter of its transactions over Buy Now, Pay Later channels by 2028. Gen-Z responds quite well to the change, accounting for 44% of the demographic preferring this channel.
The Commerce and Payments Trends report of 2022 puts the Buy Now, Pay Later mechanism in the mainstream transactions in 2022, underscoring how it has taken the globe in a massive sweep. Let’s throw some light on why this payment method is so popular and how it can help you boost your sales.
What is Buy Now, Pay Later (BNPL)?
Buy Now, Pay Later (BNPL) is a payment mechanism that allows your consumers to purchase by agreeing to pay for the items later. It is referred to as a ‘Point-Of-Sale Instalment Loan.’
The Buy Now, Pay Later mechanism is popular because it allows the installments to be interest-free. Furthermore, customers don’t need to worry about their credit scores when paying through this method. These approvals are also easier to acquire relative to the traditional credit or debit installment lines, allowing the customers to afford moderately expensive items without resorting to traditional financing channels.
Cesar Ornelas, founder of Cesar Ornelas considers that Buy Now, Pay Later is the sale of products with a deconstructed, distributed payment mechanism over a decided period. The consumer purchases a $45 product for $15 right now, agreeing to pay the balance within the coming weeks/months in equal parts of $15 each.
The Benefits of Buy Now, Pay Later
Aside from establishing a channel for mutual consensus over a sale between the merchant and the customer, the BNPL mechanism of payment has much in store yet to bestow upon both consumers and merchants. Let’s understand the benefits of Buy Now, Pay Later for online shoppers and online retailers.
What Online Shoppers Will Get
Zero-Interest Instalments
EMIs are typically riddled with expensive interest rates that, at the end of the term, cost more to the consumers than the actual down payment. In this regard, the Buy Now, Pay Later arrangement trumps EMIs as it eliminates interest from the financing equation. Consumers can just go ahead and spread their costs over a couple of months, interest-free.
Clarity and Responsibility
The Buy Now, Pay Later method is crystal clear about eligibility and payment terms. Online shoppers know what to expect from the get-go when they agree to use this method, which is the biggest driver of BNPL sales.
Approval for Lending
There is still hope in Buy Now, Pay Later for the customers whose credit scores aren’t among the best or those whose traditional financing channels have previously been rejected. The approval norms and requirements aren’t very stringent, giving the shoppers some leeway to complete a purchase with the merchant.
What Online Retailers Will Get
Merchants get various benefits from partnering with a Buy Now, Pay Later service provider.
Zero-Risk Payment
Even though the customer pays for a product in installments, the merchant gets paid in full for the merchandise by the BNPL service provider. One of the most significant advantages of Buy Now, Pay Later for a merchant and the risks associated with installment-based payments that are spread out are eliminated.
Improve Purchase Completion Rates
As mentioned, the world of online commerce is riddled with cart abandonment. As a matter of fact, 99% of new visitors do not complete the purchase on their first visit. One factor influencing purchases is the payment method; BNPL makes things easier for customers. When payment is simple and affordable, customers hesitate less to complete a purchase, significantly improving the conversion rate for the merchants.
Increase in Average Order Values
As the costlier items become more affordable for the shoppers, their average order values increase. For a customer who can afford a $15 down payment at once, a thing worth $45 is now accessible and affordable for purchase through BNPL. For the merchant, encashment of $45 occurs at the point of sale, drastically improving the average order value.
Simple Assimilation
The Buy Now, Pay Later integration is reasonably easy to achieve in your existing payment systems and gateways. There is no extra module or peripheral required to start it up – for the customers; there is no significant change in the user interface or experience while checking out. This maintains a seamless shopping experience for them.
New Customers
Buy Now, Pay Later exposes your brand to a new class of customers who can now afford to pay more for your products, in a way. BNPL allows you to pitch your high-end products to a broader base audience and expand your target groups.
The Risks of Buy Now Pay Later
Merchant Frauds and Defaults
Merchants may falsify customer IDs and orders to collect payment from BNPL services. The products would be listed as sold but wouldn’t be shipped. On the other hand, honest merchants grappling with the BNPL fees may find themselves unable to pay, creating a problem for BNPL services.
Customer Overspending
BNPL creates an indirect problem that makes for online shoppers. Customers may purchase more expensive products in the same session, leading to payment defaults. Collecting the balance could become a problem for BNPL services. A Morning Consult survey revealed that 25% of the BNPL users defaulted on payments in January 2022.
Fraudulent Chargebacks
Buy Now, Pay Later Fraud is a type of eCommerce fraud that commonly leads to fraudulent chargebacks. Unauthorized purchases may occur on a customer’s account, creating a liability for the BNPL service provider.
Interest Rates
BNPL services pay the merchants in full after a sale is made. Sometimes, the BNPL’s sponsors may not sanction loans at the desired interest rate, creating a problem with clearance.
How Does Buy Now, Pay Later Work?
The process begins when a merchant incorporates the BNPL mechanism into its transactions. They look for suitable service providers and partner with them, allowing them to add BNPL as a payment option to the checkout page on the merchant’s website.
Online customers can use the Buy Now, Pay Later option when they sign up to the merchant’s website during checkout. They need to be eligible for the lending terms prescribed by the BNPL service provider to use this payment method. Once the approval is received, the customer pays the item cost in part and agrees to fulfill the balance in installments.
At the other end, the BNPL service provider releases the payment in full to the merchant when a sale is completed, expecting installments from the customer at the agreed-upon terms.
Best Practices To Implement Buy Now Pay Later in Your Website
1) Choose the Right BNPL Provider
It is essential to choose the right BNPL provider. Familiar options like PayPal offer the “Pay in 4” feature that lets you divide your purchase into four equal payments with no interest or fees.54% of customers prefer purchasing from online retailers that offer PayPal, capturing second place as the most trusted brand.
Integrating PayPal to increase customer trust and sales is a great option. Moreover, PayPal integrates with the PayPal wallet, helping customers control and manage their payments easily.
2) Highlight Your BNPL Payment Option
The best way to increase sales for online stores is to show the option early in the purchase journey before people abandon their baskets because items are too expensive. It is essential to find the best placement for the BNPL payment option. For example, you can add a short description or a program logo next to the “Add to cart” button on your product pages.
Find funnel drop-offs for all pages before adding BNLP language. Let’s say you have a large portion of organic traffic dropping from the product description pages. You can add BNLP information to the product page or the search bar.
The best option to highlight BNPL is to add a short description next to the checkout page. Once customers see the BNPL messaging along with other trusted payment options, that will encourage them to complete the purchase instead of abandoning their cart.
P.S. Test different placements of the BNPL option, for example, below or above other payment methods. You can use Exit-intent popups to encourage more conversions.
3) Support BNPL on Paid Search
Paid Search is a simple way to support Buy Now, Pay Later. Focus on products where customers are more likely to use the BNPL option. Make sure to use customer data to figure out which products drive the most BNPL orders.
Once you decide which products perform the best, you can add the relevant keywords to your targeted ad copy to promote BNPL with some additional budget. Add ad variations and callouts describing the feature or a link to a web page with the BNPL information. You can apply the following tips to your paid campaigns:
Show your ads to customers who are looking for BNPL options;
Show customers the BNPL messaging who don’t know about it.
After the end of your campaign, analyze the performance of your ad variations against evergreen variations. Check out any rise in BNPL orders, especially on the targeted products.
4) Use On-Page SEO Techniques
Another thing you should care about is increasing your rankings for specific search terms and creating the optimal search strategy for Buy Now Pay Later. On-page SEO will help improve the overall site authority and rank higher in search engines.
Many online shoppers are now searching for desired products and buy now later pay. It is essential to optimize your website for an extensive catalog of keywords to make these options available. You can use SE Ranking to expand your list with untapped and valuable keywords verticals. It will help identify the long tail phrases with lower search volume but higher conversion rates.
Make sure to optimize all category and subcategory pages within the website. Avoid duplicate meta descriptions, and include different variations of phrases. Optimize your title tags, and have BNPL in the H1 or H2 heading.
If you want to rank well for BNPL terms, use the BNPL terms at least once in the copy, and make it scannable. Include logos next to a place where customers will notice BNPL options on your website to increase conversions and sales.
The last thing you should do is internally link BNPL terms from blog pages. When you optimize your target pages, add BNPL to the title, meta description, body, and include internal links, your target pages will get high relevance for the BNPL keywords.
5) Recover Abandoned Carts
According to this resource, 75% of customers abandon their orders at checkout because they are too expensive. Thanks to the right email marketing platform, you can send targeted emails to customers who abandon their carts with Buy Now Pay Later options.
Another way to make people return their shopping carts is to run remarketing display ads on search results and social media. Adding the BNPL option to your display creatives is crucial, which will increase conversions and sales from customers who abandon checkouts without converting.
6) Use BNPL for Your Seasonal Marketing Campaigns
If you run different seasonal campaigns like Black Friday, Christmas, Easter, etc., you can get the maximum benefit from BNPL in your collateral. Sales seasons are the best way to inform customers about BNPL payments to increase sales.
When promoting your seasonal campaigns, use particular hashtags like #Klarna, #Affirm, or # Quadpay to increase the visibility of your posts. Feature BNPL right from your homepage, product pages, landing pages, checkout pages, and in your emails to boost awareness for online shoppers.
Don’t hide this payment messaging at the bottom of the pages. Instead, create campaign graphics with a large font and bright colors to attract attention. Make BNPL a deciding factor between you and your competitors.
7) Measure and Adjust Your BNPL Efforts
The final step in any digital marketing strategy is to measure your efforts. Understanding what works well and doesn’t allow you to improve the overall campaign. For example, you might change the design to test different placements of BNPL mentions or edit your email marketing.
Here are some KPIs to track for the success of your BNPL strategy:
Total sales
Conversions
Average order value
Customer lifetime value
Cart abandonment rates
Analyze each step in the buying process to figure out whether BNPL generates the results. Find out where customers see the payment option, your target audience, and whether you should place it earlier in the process. Notice that BNPL is especially popular with the younger generations.
Wrapping Up
BNPL use among Gen-Z has experienced a 600% growth since 2019. The numbers say it all. Online customers prefer this method of payment as it gives them more flexibility.
If you want your business to grow, it’s essential to offer as many payment options as possible and let your customers get their preferred choices. The Buy Now, Pay Later model can help boost sales, decrease cart abandonment, and build trust.
About the Author
Irina Weber is a freelance writer and content strategist at SE Ranking. She loves helping brands create, publish, repurpose, and distribute content through different marketing channels. She is a regular contributor to a lot of media outlets like SEW, Adweek, SME, SMT, CMI, etc. Follow her on LinkedIn.
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