Buy now, pay later (BNPL) payment methods are one of the hottest topics in ecommerce right now and are expected to grow by 10 to 15 times over the next few years.1 BNPL allows customers to pay flexibly and order goods at no cost, and then pay back what they owe in the form of interest-free installments. This offers them convenience, seamless checkouts, online transaction transparency in handy apps. It also significantly boosts their purchasing power and raises average order values.2
On Black Friday 2020, BNPL services such as Klarna and Afterpay more than doubled compared to the year before. The ongoing COVID-19 pandemic has only accelerated their growth.3 According to the research company Kaleido, 30% of total ecommerce spend will be via BNPL by 2025.4
With Black Friday 2021 just around the corner, the moral of the story from recent years is: not offering a BNPL method in your online shop is a conversion killer. Let’s look at the reasons why customers increasingly choose these methods and how you can act on this trend.
Meeting customers’ needs
There are many reasons why BNPL payment methods have been so popular of late.
- Flexibility: Customers can order with a few clicks and choose how to make repayments.
- Affordability: Customers make purchases that would have been difficult to pay for in one go.
- Transparency: Customers can see, feel, and try their items before parting with their cash, with no additional delivery fees.
BNPL methods were originally targeted at millennials and Gen Z as an alternative to traditional credit card schemes. About two-thirds of millennials say they don’t even own a credit card.5Research has found that these demographics spend about 44% (millennials) and 72% (Gen Z) more on orders if BNPL is available as a payment method.
At the same time, the shift to BNPL among the older population has also been significantly faster than anticipated, growing nearly 40% year-over-year worldwide. BNPL is especially popular in the retail and electronics sectors because of versatile consumer behavior. It is already a stable payment method for big brands such as ASOS and MediaMarkt.6
Benefits of BNPL for Black Friday
Providing a range of payment method options is always helpful for capturing new customers who visit your webshop. Adding a BNPL option can help you:
1. Attract first-time customers. First-time customers are less hesitant to buy from you if they can receive the product before spending money. Increase trustworthiness for your store and turn first-time shoppers into loyal customers.
- Try and see items before paying
- Postpone or split payments
- Return items easily
2. Help customers manage their cash flow during the shopping season. In the sales season from October over Black Friday up to the Christmas sales, customers face a mountain of expenses. Big shopping comes with big happiness and a big bill. BNPL helps customers spread expenses more efficiently and buy more, while managing carefully how and when they pay.
3. Facilitate impulsive shopping. With great deals popping up everywhere, purchases are often unplanned and happen on the spur of the moment. But such purchases can affect customers’ monthly budget and prompt them to abandon their cart if they don’t find a payment option that can help them squeeze the purchase into their budget.
Increase sales with the right BNPL method for your business
To harness the Black Friday season, it is vital to offer the right payment methods to the right audience, for the right products and purpose. There are many different BNPL methods and suppliers to choose from, all of which we support at MultiSafepay. In our portfolio you’ll find established names such as Klarna and AfterPay, as well as more recent arrivals such as in3. We also offer bespoke options such as Santander's Betaal per Maand, which is dedicated to higher cost purchases (from 250 EUR to 8,000 EUR within 10 to 72 months).
Last but far from least, check out our very own in-house BNPL solution Pay after Delivery, which offers something that most payment service providers do not: we control and monitor the payment flow from end to end for increased stability, security, and customer service. You can communicate with the developers of the payment solution so we can completely tailor this product to your needs. No third party involvement ensures minimal room for delays or unforeseen financing or other issues.
Build a standout checkout for Black Friday
The winners of this year’s holiday season will be merchants that stand out, meet their customers' needs and provide a seamless, convenient, and enjoyable shopping – and checkout – experience. Stay tuned for Session #6 in our Black Friday series on building the perfect checkout.
With more than 20 years of experience in ecommerce and a variety of digital payment solutions and features, we can help you adapt to your customers’ demands and stay ahead of the market.
If you’re already working with us and want to know how we can help set up BNPL methods for your shop, reach out to your account manager.
Want to hop on board and see how fast we can set up BNPL options for you?