In recent years, Buy Now, Pay Later (BNPL) has been one of the major trends in ecommerce. The BNPL formula gives customers a unique way of fulfilling their payments through several installments, often without interest. Added benefits for businesses are the lower cart abandonment rate and higher order value associated with a BNPL offering. These factors and the ever-increasing popularity, have led to Bank of America estimating that total BNPL transaction value will surpass a trillion dollars worldwide by 2025.
We’ll take a closer look at how BNPL works exactly and what advantages your business can benefit from by offering it.
Buy Now, Pay Later, the current scenario across Europe
In the later part of 2021, Sia Partners conducted a study of the most popular BNPL systems in Europe today. From this study, Great Britain (one of the first countries to implement the PSD2 directives) emerged as an important innovator in the BNPL sector. In France postpay started to become popular around 2010, after which the ecommerce sales through BNPL grew by about 20% on a yearly basis, reaching 6 billion euros in 2019. Looking at the other European countries, one of the laggards was Italy, only adopting the payment method recently. That situation is now changing though, as Italian customers are increasingly looking for BNPL methods. Overall, it can be said that BNPL has become a mainstream payment method. On a yearly basis many alternatives are created by major companies such as Amazon or PayPal.
How it works and what it can do for your business
There’s many different BNPL offerings on the market, but they’re all similar in the sense that you pay for your purchase in installments (some limited to only a few and some offer a lot of installments), and most often, they’re without interest.
BNPL has become so popular because they provide very fast checkouts. Once a customer selects the payment method, the verification/authentication process usually takes a couple of seconds and the order is confirmed. This provides a smooth, frictionless payment experience. The payment can often be fulfilled without creating an account, and only requires a quick check of some personal data to be completed.
Main advantages of BNPL
BNPL offers a variety of advantages for both the merchant and the consumer. We’ll have a look at the advantages for both groups below.
For customers, a BNPL option can be an ideal payment method if they’re low on money or looking to spread a bigger purchase (while not using a creditcard). This effectively increases their purchasing power. Offering a BNPL method and highlighting this on a page where it’s easily identifiable, can actually attract new customers. Furthermore, statistics have shown that customers who use BNPL are more likely to finish their purchase and not abandon their cart. Besides these advantages, the aforementioned simple and fast payment procedure will stimulate repeat purchases. For new businesses it’s also considered as a great tool for convincing customers to trust their webshop, being able to have a product in your hands before paying for it will always be a great way of earning trust.
The future of BNPL - MultiSafepays perspective
With the growth in recent years, and continued rise of ecommerce in most European countries, we expect that BNPL will become even more important in the upcoming years. With a payment solution that’s so focused on consumer needs, it’s prompted fintech companies to take a more holistic approach and dedicate more resources to creating quick and seamless checkout experiences.
Many financial institutions have become more open to embracing the possibilities BNPL has to offer, and are increasingly looking into the options of offering BNPL solutions that are specific to their brand and platform. We, as an innovative payments provider, see that as a need we’re perfectly suited to fulfill. Tailored solutions fitted to companies have become a staple in the MultiSafepay development chain. Through our in-house development we’ve created a variety of solutions that offer ecommerce companies a refined payment solution. By developing said products in-house we can cut out unnecessary third parties and create highly resilient, adaptable payment products. Taking into account the recent growth in ecommerce, we think the future BNPL as a major payment method is especially bright, and we’re excited to be an active contributor to the future developments of this way of paying.
Looking to add BNPL to your payment mix?