How ‘Buy Now, Pay Later’ Can Overcome Challenges of GrowthBy Regina Moreno | Mon, 11/22/2021 - 12:49
"Buy now, pay later" (BNPL) is a tiny slice of the consumer credit market, but short- and long-term payment plans are experiencing explosive growth and heavy venture capital investment around the world, and especially in Latin America, where a big part of the population is underbanked and work in the informal economy. This solution is gaining popularity due to its transparency and flexibility and will soon become the preferred way to purchase.
More people than ever are shopping online. Kueski Pay made an intelligent move by orienting its marketing toward millennial and Gen-Z consumers – these demographic groups hold a surprisingly small share of the world’s total wealth, so they are more likely to need help in buying products. They also are the age group least likely to have, or even to want, traditional forms of credit like credit cards.
With that context about the importance of BNPL, it is time to talk about growth, and how this solution might be the best solution for e-commerce to boost their sales. There are many companies that offer "buy now, pay later" solutions but, the details make a big difference to consumers and merchants.
BNPL helps online retailers attract customers and increase revenue so, if you’re considering BNPL for your organization, here’s how to get started.
- Evaluate which BNPL provider is the best for your company
Trust is everything at this point. Each tool may offer similar features but it is important to know that the option that gives you better conditions, the fastest integration (SDK or the main e-commerce platforms), more awareness of your brand (co-marketing), and safety may increase consumer trust, which may increase sales.
We also can’t ignore the fact that online fraud is growing exponentially, and many BNPL providers, like Kueski Pay, assume the risk of any fraud committed using their payment method – businesses know that fraud is going to happen, so this is a good way to offload some of the burden.
- The requirements for your clients to obtain financing
You don't want your customers to have a bad experience when paying for their purchase; make sure the BNPL you choose is very customer-centric.
- Let your customers know that you have a BNPL option integrated and create a 360 marketing plan
Once you choose a BNPL option, you must generate awareness. Let people know how to use it before the checkout, make a big announcement in your community, use social media, newsletters, banners, paid advertising, etc. On your website, this must happen before consumers decide an item is too costly and exit the funnel.
- Highlight your BNPL option at your checkout
The BNPL messaging alongside other trusted payment options may encourage users to complete the purchase. Make sure that customers see this payment method throughout their purchasing process and eliminate any doubts. Use infographics, images, or videos as a tutorial.
- Track the success of your BNPL strategy
Like every other marketing and sales strategy, testing is integral to a successful BNPL strategy. Understanding what works and what doesn’t allows your marketing teams to pivot as needed.
You need to have a clear vision of your conversion rate, whether your average ticket increases when the chargebacks are better, total sales, cart abandonment rates, new users, etc.
- Exclusive promotions
If you have access to exclusive promotions and benefits for your customers, they will be glad to try new payment options available in your store. More than a provider, you should make sure you have a partner with whom you can work different strategies on a recurring basis that translate into a better experience for your users and higher sales.
To win in this sector requires a combination of merchant reach, consumer adoption, powerful AI underwriting, and e-commerce marketing savvy. The presence of a large number of BNPL service providers in Mexico is expected to create growth opportunities for the regional market.
"Buy now, pay later" is about owning the customer relationship, not just facilitating a one-off transaction. The new form of credit is just BNPL’s shiny face. Behind it lie ambitions to dominate the future of shopping with a virtuous circle of data and transactions that render other financial intermediaries irrelevant.
How It Works
Using a BNPL option to spread out payments on a big buy resembles a personal loan in that your payments are split up into equal installments over time. These loans are often interest-free as long you make your payments on time and in full. This differs from a traditional credit card purchase, which charges interest for every month you carry a balance.