The recent unprecedented growth of digital payment platforms has taken the global financial market by storm. Thanks to fintech developments, digital payment platforms have introduced modern, effective, and unique customer financing solutions. Digital solutions like Buy Now Pay Later (BNPL) and no-cost EMIs enable customers to buy commodities without paying their cost upfront, instead setting up flexible payment options for the future.
According to a C+R research report, about 56% of users prefer BNPL over credit cards for purchases, and 38% believe that BNPL will eventually replace credit cards.
BNPL and no-cost EMI schemes offer short-term credit that can be flexibly repaid over weeks and months. They are reliable and cost-effective solutions that can be accessed on the go in this internet world. New-age digital payment solutions minimize customer friction due to credit shortages.
But what is in it for merchants, retailers, and small businesses? Let’s find out!
Critical Benefits of BNPL for Merchants, Retailers, and Business Owners
The demand for the BNPL model is rising globally as the economies recover from the aftermath of the pandemic. Offline businesses have seen a sharp decline in customer footfall compared to the pre-pandemic era. BNPL and no-cost EMIs can help enterprises absorb this shock to some extent with their distinct product features.
Quick and Seamless Credit Disbursal
Unlike credit cards and bank loans, BNPL providers don’t require cumbersome paperwork and tiring formalities. Customers can apply for BNPL with a digital KYC to start transacting, enabling businesses to initiate the sale process instantly.
Enhanced Customer Experience
Businesses offering multiple and flexible payment options give flexibility to their customers, thus, increasing satisfaction and customer experience. Flexible payment options like BNPL and no-cost EMIs give businesses an edge over other businesses with rigid and traditional payment options regarding customer experience.
As per YouGov’s “The Future of Financial Services” report, India tops the world ranking in its intent to use “Buy Now Pay Later” schemes in the future. 28% of Indian urban youth exhibit willingness to opt for BNPL plans to make purchases in the coming 12 months, much above the global average of 17%. This indicates the growing popularity of BNPL services among Indian consumers.
Improved Customer Loyalty
A pleasant customer experience drives customer loyalty. If the customers have a good time visiting your store and find convenient payment options available, chances are they will make repeated purchases from your store in the future.
Also Read | FY 2022-23 will be the year of Buy-now-pay-later: Uday Chaudhari, Senior Director, Technology, Synechron
Increased Sales Value
BNPL helps customers make the cart value more consumable in their budget, which is why it is gaining so much popularity and helping retailers and small businesses earn more revenue. Some global businesses have witnessed about an 85% increase in average order values when customers pay via BNPL.
Wider Reach
BNPL is more prevalent amongst millennials and Gen Z customers. Therefore, if you are a merchant or a business owner mainly engaging with Gen X and baby boomers, the BNPL model can be a game-changing maneuver to widen your reach to this target customer segment.
The Way Ahead
Buy Now Pay Later (BNPL) is one of the most enticing developments in the fintech industry. It creates a win-win situation for customers as well as business owners. Customers get access to low or no-cost EMIs without paying upfront payment while making a purchase, and businesses get an opportunity to build long-term relationships with customers and increase their revenues.
The global BNPL market size is expected to cross the $39 billion mark by 2030, bludgeoning at a rate of 29% between 2022 and 2030. Modern-day businesses must get along with this trend as BNPL, and digital payment platforms are here to stay.
By Pallav Jain, Co-founder, and CEO, ShopSe
