3 Buy now, pay later Options for retailers
As Buy-It-Now and Pay-On-Pay services become more and more popular among shoppers (see Consumer overview on page 22 for more on this), retailers should consider adding these services to their sites. Web or their in-store payment options. Below are three of the most popular Buy It Now and Pay Later service providers that can improve your retail business.
Used by home decor retailers like Wayfair and Room & Board, Affirm offers both online and physical retailers a zero or low interest financing option for customers. Unlike credit card companies, which charge compound interest, Affirm charges straightforward interest on purchases, which means interest rates are determined by the price of the original purchase, not the price plus accrued interest. Customers can be pre-qualified at the start of their retail journey so that dynamic messaging is personalized for them throughout their shopping experience. Payments can be split or made in installments, with deadlines of six weeks to 36 months. Customers always know their total in advance, and there are no hidden charges, late fees or the like. Retailers can customize the service to suit their needs, with tailored durations and interest-free promotional offers. Affirm’s adaptive payment feature clearly presents financing options to customers, with terms and rates the retailer can customize. www.affirm.com
More than 16 million shoppers have used Afterpay to finance their purchases, 73% of which are Millennials and Gen Z, according to the company’s website. Post-payment purchases have a clearly defined payment schedule, with customers required to make one payment every two weeks, for a total of four payments over six weeks. The service does not perform an external credit check and over 90% of customers are approved. Afterpay integrates with a number of ecommerce and point-of-sale providers including Shopify, Stripe, Squarespace, and more, and the company can also build a system tailor-made for retailers with their own web developers. Customers can manage their purchases online through the Afterpay app, and retailers get paid within days of the transaction. In-person funding is also available. Customers download the Afterpay app, set up the Afterpay card in the app, and can use the digital card in-store through Apple Pay or Google Pay. There is currently a waiting list for retailers to add the in-store option. www.afterpay.com
PayPal offers the most flexibility for retailers, with options to meet any retail situation, from e-commerce to brick and mortar, and everything in between. The Buy Now, Pay Later service, known as PayPal Pay Later, is available at no additional cost to existing PayPal Checkout customers. The service offers customers two additional payment options. Pay in 4, the company’s finance service, requires customers to make an interest-free payment every two weeks, with four payments in total. PayPal credit gives customers a longer repayment period, and purchases over $ 99 are interest-free if paid in full within six months. The credit option requires a credit check, unlike the Pay in 4 option. PayPal’s dynamic messaging features the most relevant Pay Later option on product pages, and options clearly communicated at checkout can help them make the right choice for them. Merchants are paid in advance and customers can manage their payments from the PayPal app. www.paypal.com
Benefits of offering a Buy Now, Pay Later option
Reframing the price of more expensive items into manageable payments means larger transactions. Affirms claims that businesses with paid messaging on their site saw a 58% increase in overall average order value.
The popularity of financing among the younger generations helps introduce your retail brand to new customers.
Customers who see a buy now, pay later option are more likely to complete their purchase while browsing. Afterpay business partners report an average 20% increase in cart conversions and more loyal customers.
With no credit checks and zero or low interest rates, buying now, paying later is less risky than credit card purchases. PayPal says 56% of customers prefer to pay in installments rather than using a credit card.