What is BNPL?
Buy Now, Pay Later (BNPL) is an emerging trend in retail payments that offers customers flexibility by allowing them to pay for purchases in installments without incurring high credit card interest rates. This financing method, viewed as an alternative to cash or credit cards, has become particularly popular among consumers facing inflationary pressures.
According to Adobe Analytics, BNPL purchases surged by 85% during the Thanksgiving to Cyber Monday period compared to the previous week.
If you’re considering offering BNPL as a payment method, here’s what you need to know.
How Does It Work?
BNPL companies are typically fintech firms that function similarly to banks but aren't traditional banks. Retailers can partner with one or more BNPL platforms, giving customers the option to split their purchase costs into installments. When customers initiate the checkout process, they will see the option to pay using BNPL.
For most shoppers, approval for a BNPL account is faster than applying for a credit card since it doesn't require a "hard pull" of their credit report. Most BNPL companies offer interest-free financing repaid in four equal installments over two weeks.
Costs and Considerations
BNPL platforms charge retailers a fee, usually ranging from 2% to 7% of the purchase price. These fees can vary depending on the platform’s policies and the type of payment arrangements offered. For longer repayment periods, the fees may be higher.
While BNPL offers convenience, it operates in a regulatory grey area, leading to concerns about encouraging debt accumulation. Retailers should ensure transaction limits align with their pricing points when choosing a BNPL provider.
Benefits
BNPL can attract younger shoppers and those who prefer more flexible payment options. It helps lower the barrier to purchase, allowing customers to afford higher-value items.
Provided by www.ebooom.com, a leading global jewelry industry supply chain service provider.