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Is Buy Now, Pay Later For You?

BNPL began as an online pay-over-time option, which has surged since the pandemic.

by Diane Falvey
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Every consumer entering your home furnishings retail establishment likely has a credit card on hand to make a large purchase and then pay over time. Most larger furniture stores have their own credit pay-over-time options, often with lower interest rates than a traditional credit card. Even Amazon has a pay-over-time option.

So what are the advantages of also offering Buy Now, Pay Later (BNPL) options via various platforms, such as Affirm?

BNPL began as an online pay-over-time option, which has surged since the pandemic, and is projected to grow globally to $22.86 billion this year, according to Accenture, plc. And the global BNPL market is projected to grow to $90.51 billion by 2029. In the United States alone, BNPL users have increased 300 percent since 2018.

As in-store shopping returns to more normal levels, BNPL has also extended to brick-and-mortar stores. Consumers are looking for convenient payment methods, and retailers with an omnichannel approach can seamlessly offer both online and offline BNPL services.


Benefits of Buy Now, Pay Later

According to a Citizen’s Financial Group survey, 76 percent of U.S. consumers are more likely to make a retail purchase when it’s backed by a payment plan. According to the survey, 62 percent of consumers would prefer fixed monthly plans with clear payment terms. Further, 66 percent of consumers feel that they have enough credit cards and prefer not to open more just to make a large purchase.

BNPL services make day-to-day purchases more digestible for shoppers in several ways. BNPL often has options of little to no interest fees and minimal, if any, credit checks. These services also reduce disruptions in the shopping journey as spending limits can be assessed prior to purchase.

As a result, consumers are likely to shop in stores that offer installment payment plans. According to a PYMNT survey, 66 percent of millennial and bridge millennial shoppers have a positive view of luxury and specialty retailers that offer BNPL options in-store and online. Almost half (46 percent) of department store customers would switch to another retailer given the option of BNPL services.

As BNPL has exploded in online shopping, consumers see this as an attractive way to spread out payments. When shopping in-store, they also view it as a value-add. Offering BNPL can enhance the shopper experience. Retailers can even use white-labeled BNPL to focus on brand building and increase sales and average order value.


3 BNPL Platforms to Check Out

Affirm: Affirm doesn’t charge fees, it’s accepted nearly everywhere and it offers the widest range of payment options. Buyers can choose from a standard Pay in 4 plan or a monthly loan that stretches up to 48 months.

For smaller buys, the Pay in 4 option has no interest and no fees of any kind. Larger purchases may qualify for monthly payments with an APR from 0 percent to 30 percent, but still no fees.

Affirm works at thousands of retailers. Plus, Affirm’s BNPL app allows you to create a virtual credit card that can be used for online or in-store purchases where it’s not offered.

Klarna: Klarna offers a virtual card, but it could also fit as an in-store BNPL app. With Klarna most plans don’t have interest, and there are no fees as long as payments are made on time.

Plus, a virtual card can be added to the buyer’s mobile wallet, like Apple Pay or Google Wallet. This combines the convenience of BNPL with the ease of contactless payments. The Klarna app also offers curated shopping tips, rewards points and exclusive discounts.

Afterpay: Afterpay has a fast and simple application process that may or may not include a soft credit check. They offer 0 percent interest, and don’t report purchases or payment history to the credit bureaus.

What makes Afterpay shine are features designed to prevent overspending and the platform’s ability to reward smart spending habits. One example is a purchase limit that grows with a history of good payments. The program also features automatic payment reminders to ensure customers never miss an installment.

Beyond these well-known names in the BNPL world, there are additional platforms that can be researched to find the options that work best for your retail customer. And there are also white-labeled BNPL options that you can use for increasing customer loyalty

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