Why BNPL Will Be a Big Payments Trend in 2023

The shopping behavior of consumers is unpredictable. There is a constant flux between online shopping and visits to a brick-and-mortar store. Regardless of where they shop, consumers demand seamless and convenient payment methods like buy now, pay later (BNPL). As economies see in-store shopping return to normal, brick-and-mortar retailers who take an omnichannel approach and offer online and offline BNPL services to their customers can reap the rewards. 

Before the pandemic in 2020, 60% of consumers preferred to buy in physical stores. In April of the same year, that preference fell to 24% due to the slowdown in economic activities around the world. By November 2020, it showed a slight recovery reaching 34%. But it wasn’t until a year later that the return to physical stores truly rebounded, reaching 72% of consumers. But now, digital habits adopted during the pandemic show no signs of abating, and retailers need to adapt. 

Leveraging Omnichannel BNPL 

Consumer expectations for digital experiences are higher than ever and are spilling over into their in-person shopping. According to the global SOTI study, omnichannel strategies will be a relevant factor for the industry in 2023, since 45% of customers in Mexico may be willing to combine both purchase formats – ordering online and in-store. 

Especially for Latin American countries, where half of the population falls under the underbanked category, BNPL will be a game changer because of the use of artificial intelligence (AI) and data analysis and the fact that it does not require a credit card or even a bank account. This makes total sense in markets like Mexico, for example, where 90% of the transactions are still made in cash. 

Furthermore, by not requiring a credit card, even unbanked consumers have access to higher-value goods, such as home appliances and electronics. If the consumer happens to have a credit card, he or she may also prefer to use BNPL if their credit limit is low or if the user wants to allocate credit to other expenses. 

Benefits of Introducing BNPL 

The availability of BNPL solutions, like Kueski Pay, encourage people to purchase more and increase their cart size since they can split their purchase costs. With BNPL offerings and financing options, merchants benefit from the increase in their business’s average ticket size by up to 40%, with up to 70% higher conversion rates, lower abandonment and return rates, higher customer lifetime value, and protection from prevalent fraud and cyber risks. 

For the consumer, BNPL offers transparency, security and greater control over their spending. Moreover, since these options are growing in popularity, customers are now expecting to find them wherever they shop. By providing the possibility to pay in different installments, merchants can influence the customer's decision to purchase a service or product.

In general, for the Mexican and Latin American population, BNPL represents a huge opportunity for businesses to open their doors to more people who are unbanked or do not have the opportunity to make an online purchase or pay in installments (both in e-commerce and in a physical store). This not only benefits businesses; it also covers a latent problem of financial inclusion in these regions. A clear example is Mexico, which despite the fact that almost 80% of its adult population is unbanked, its e-commerce retail grew 23% during 2022, continuing as one of the countries with the highest growth rate and becoming the fourth fastest-growing country worldwide where BNPL plays a crucial role. Ten percent of Mexicans use this payment method to buy both online and in-store. 

Payments Flexibility at POS Is a Must

To give Mexican consumers more buying freedom, it’s high time to explore how offering both online and in-store BNPL can help merchants achieve their business goals, because let's be honest, shopping is no longer just about having fun but about having options that allow us to have control over our purchase experience, spending and getting immediate access to products without paying full price upfront. By adopting BNPL at the point of sale, you are telling customers that you understand their needs. 

It’s clear that physical stores are here to stay, and e-commerce will also continue growing. The key for merchants and fintechs is understanding that, while there are worldwide payment trends, each country or region has its own habits to adapt to, and understanding these builds lasting customer loyalty across both channels.

Offering BNPL in-store improves the shopping experience of customers in so many ways, but is so important to make sure employees are trained both on how to operate and troubleshoot the system but also on how to advertise it to customers. 

As merchants look for ways to capture every possible sale in times of economic uncertainty, they may be ready to upgrade to a system that includes BNPL – and to work with payment solution providers who can provide them.