You may have seen the acronym of BNPL or heard the term, Buy Now, Pay Later. This is the latest merchant tool intended to help merchants increase sales. As our nation begins to slip into a recession, BNPL transactions will help merchants maintain sales as Americans begin to tighten their wallets. BNPL makes it easy for consumers to get what they want today and pay for it later. Here are the 5 things you need to know:
BNPL provides a perfect tool for upsizing sales. Let’s take an item as basic as a lawnmower. Perhaps a customer has set a budget for a simple, basic lawnmower. However, while shopping, he sees the deluxe ride-on lawnmower and learns that he can make payments on it after being approved in less than a matter of minutes. This increases the chances of a larger ticket sale. The customer gets a better lawn mower, the merchant gets a larger sale and gets paid today using the same concept as accepting a credit card.
Merchant Services Providers such as Aurora Payments offer this increasingly popular payment option to merchants. The customer uses a QR Code to access a credit application on their phone. Using simple data such as the customer’s name, address and phone number, a soft credit check is performed, meaning the BNPL transaction will not show up on the customer’s credit report as applying for credit. Decisions are made in seconds. An account is established for the customer and the purchase is charged to the new account. Merchants get funded in about the same time frame as a credit card transaction.
BNPL transactions are sometimes referred to as a point-of-sale installment loan. Customers are typically required to make an initial payment during the transaction and the remaining balance is divided into a predetermined number of payments. The average payment required during checkout is 25%. Approvals are often easier to obtain than a credit card or traditional line of credit which increases your opportunity for bigger sales. BNPL payment plans don’t always show up on a consumer credit report unless a payment is late or the buyer defaults on the payment plan. Customers make monthly payments using a debit card on file, a bank account to debit by ACH or payments can be charged to a credit card. It is important to note that not all purchases may be eligible for BNPL financing. There might also be limits on the total amount that can be financed based on credit worthiness.
Back in the day, companies like Fingerhut, Sears and J.C. Penney pioneered sending catalogs and incorporating financing through their own in-house credit accounts. In a recent survey, 55% of consumers say they spend more money when a product can be financed and is displayed as a monthly payment, rather than the total price. Give your online shoppers the ability to buy more today and pay for it later. Shopping websites that don’t embrace and incorporate BNPL may see customers shop elsewhere just so they can buy more or better products today and pay over a period of time.
When they know they can stretch the cost of the purchase over a few months, 33% of those who have already used BNPL have reported buying higher quantities of product than they intended. BNPL programs are designed for those who don’t have the greatest credit scores, and this gives you access to buyers who might not have considered purchases with you in the past. Once they learn how easy it is to buy stuff from your business today and pay for it later, sales will increase exponentially. The fast approvals mean you won’t bog down your cash register area while waiting for an approval. Applications are self-generated using a smartphone so your employees don’t need to take any extra steps except to point out the QR Code that must be scanned to start the process.
If we have inspired you to add BNPL as an option for your customers to use, give us a call. Our team is ready to implement BNPL for your today. Call us at 833-287-6722 or email us at firstname.lastname@example.org