Revolutionizing the Checkout Experience: Embracing BNPL

In today's dynamic shopping environment, merchants aiming to stay ahead and boost sales must focus on enhancing the buying experience to make it more convenient and accessible for all shoppers. In Mexico, a significant opportunity lies in offering a broader range of payment options to better meet customer needs.

Most Mexican consumers lack access to traditional financial products. The country has a thriving informal economy where cash reigns supreme. Over 50% of the population is unbanked and 80% of transactions are still made in cash, which severely limits their purchasing behavior. Without a banking history, consumers miss out on essential financial products that could give them that history, perpetuating the issue.

Retailers, both in-store and online, stand to benefit from offering flexible payment options to attract a wider, economically diverse customer base. Buy Now, Pay Later (BNPL) is an alternative to traditional credit that’s gaining traction globally, helping merchants meet customers where they are. It’s POS financing that allows customers to pay for purchases they couldn’t otherwise afford, with zero-to-little interest and no credit history required.

BNPL adoption rates in Mexico soared by 31% in 2023, driven by increasing e-commerce and consumer demand for flexible payment options. Merchants operating in the country can create a convenient and secure shopping experience that attracts more customers and increases sales.

With traditional financial products out of reach, unbanked Mexicans often turn to unauthorized lenders who charge high interest rates, burying borrowers in debt. Thin credit files similarly prevent banked consumers from accessing loans and mortgages. BNPLs offer a low-risk alternative by employing both traditional banking data and non-traditional data.

The recent launch of Kueski Pay in-store represents a significant step in meeting consumer demand directly. This enables consumers to complete transactions through the Kueski mobile app, even without an internet connection, in physical stores. With fintechs like Kueski, a Mexico-based BNPL, customers can avail themselves of micro-loans with low or zero interest at checkout. This helps consumers skip a couple of steps to benefit from credit and helps merchants generate more sales from an otherwise untapped market.

BNPLs break down payments into small, manageable chunks to be paid over four to six weeks, making purchases more affordable. By offering POS financing, merchants can welcome more customers across the socio-economic spectrum to shop with them. What users value most is how flexible, fast, and secure it is to buy with a BNPL that allows them to pay on fortnights, followed by low-interest rates. When customers realize that splitting payments is an efficient way to shop that doesn’t put them at risk for accruing debt, they come back. An example of this is that almost 70% of Kueski customers expressed interest in using this payment option in physical stores.

Merchants who introduce BNPLs at checkout also experience a boost to the average ticket price. Consumer psychology suggests customers are generally more cautious about spending cash at checkout because it feels so definitive and finite. Splitting payments into installments helps them maximize the value of their money in the short term. Instead of buying one item for $40, they can now buy four for the same amount. POS financing also encourages customers to spend on higher-ticket items.

Credit card fraud is rampant in Mexico, so even customers with credit cards prefer to use cash or BNPLs as a secure credit option. Almost 70% of Kueski Pay users prefer Kueski Pay over their card. BNPL providers, like Kueski, have a multilayered underwriting and security process that provides both merchants and shoppers with an added level of protection. Merchants offering more security give their businesses an edge over competitors who only accept cash or credit cards.

Customers without credit want access to the same products and services that those with credit do — they just need more flexibility and opportunity. BNPLs enhance the customer experience with micro-loans that incentivize users to spend more at checkout. Merchants of all sizes who offer a wider variety of payment options will be better positioned to attract a larger customer base, increase their sales, outpace competitors, and create greater financial inclusion to support the Mexican economy.

By embracing these innovative payment solutions, merchants can ensure they are not only meeting current consumer needs but also paving the way for a more inclusive and prosperous retail environment in Mexico.