Buy Now Pay Later Payment Solution: The End of Traditional Credit Payment Era

Credit cards come with an interest-free option usage of plastic cash has always been a common way of buying products. Today, there is another option for a credit card that operates in a very similar way. You will continue to purchase the things you need and pay at a later date with BNPL finance. Coping up with the technology has been the best choice possible, as with the new options in the market, lead to increased sales.

Choosing the trend of selling online was the best choice for the retailers and has been beneficial for them. The main target of the retailers was the Millennials, and they have achieved their target. Nowadays, the millennials also have Credit Cards, and they buy all their products through cards. Hence, BNPL financing services would be the best choice for them. With the help of BNPL, they can satisfy all their need even having a low income.

What is BNPL?

BNPL has risen rapidly to prominence on online selling, with Swedish challenger bank Klarna, in the last decade. BNPL manufacturers partner with retailers to offer the choice of upfront credit for customers. The finance companies are charging at a subsequent date, either by a complete deferred payment or by splitting Payment with any interest through several fixed installments.


Accepted in advance and incorporated into the repayment schedule, the increase is thanks to a BNPL service. The use of BNPL is at a tremendous stage, thanks to payment channels and FinTech coming to the table Partnership to provide interest-free credit at checkout with leading e-commerce retailers. Today's Fintech Pay Later solutions enable shoppers to buy their product over time and pay in a predetermined number of installments. Customers are getting the benefit of no interest, or a few interest rates from these solutions, meaning no additional cost.

 

Can BNPL Replace Credit Cards?

The conventional credit card has become 'Pay-later' because it defines how young customers choose to shop and pay. In the whole world, customers are searching for quality products. They deliver comfort, peace of mind, transparency, and affordability. Credit cards don't fit with today's young consumers' value framework. High-interest rates, fees, and transparency are the causes. Particularly for those who are relatively new to credit and at risk of getting caught in a debt trap, it's not a good match.

There is still a strong use case for consumer credit products. But we expect the physical form factor, product characteristics, and user experience to continue to evolve and foresee an acceleration in the adoption of 'pay-later' and other forms of payment and credit products that are digitally enabled.

Advantages of BNPL over Credit Cards

The 'pay-later' exponential adoption across the globe demonstrates having a better product-market fit for 'pay-later' as a category because pay-later options are interest-free, transparent, and beautifully incorporated into the merchant's checkout flow. Pay later a product with the user interface as much as it is a product with credit. Consumers are also searching for a one-tap checkout experience and buyer security that leads to bringing a platform. The BNPL finance method lets customers better manage their budgets.

The pain associated with OTPs, server issues, payment errors, and numerous other friction points linked with digital payments is known to every customer in India. We firmly believe that no experience is the best payment experience and that what mobile-first customers want is not enough for conventional credit cards.

For three main reasons, traditional credit cards in India fail to scale-first. Firstly, the buyers who are new to the credit card system are not approved because they lack the credit history needed by conventional credit card signing.

Secondly, to reach prospective consumers, conventional credit card models typically incur high marketing expenses and, therefore, need to give customers broad limits to recover their marketing expenses. For a large segment of the population, the data is not there.

Finally, Indian consumers have not adopted credit cards for ordinary daily transactions and prefer to use them only for infrequent purchases of larger credit cards, which, in conjunction with the other factors listed above, restricts the addressable market of conventional credit cards.

On the other hand, traditional credit cards are rigid in construction. They also generate brand loyalty to the card issuer, the bank, funded and paid by the merchant. For the 'pay-later' category, the alignment with merchants is a key differentiator and is also reflected right at the point of sale in a superior customer acquisition model.

Millennials Preferring to the BNPL Finance Method

The target audience of online shopping is the Millennials. Presently all the millennials are having their credit cards, which they are using for online shopping purposes. With the current frauds happening in credit cards, millennials are resisting the use of credit cards. At this point, the BNPL finance method is growing effectively. With all the security and transparency, a person can buy their desired products easily.

BNPL finance method is attracting the millennials as they have a low income and the desires are more. The benefit of paying the amount in installments, the millennials are buying their desired product. Having such kind of simple and flexible payment solution is also favorable to their financial condition. They have a long list of their desires. Hence, just after completing the repayment of one item, they will buy another one. BNPL also helps in increment sales for the retailers.
Reasons why Retailers offer Buy Now Pay Later:

The hot new e-commerce trend is to buy now pay later, and most shop owners realize that the customers are welcoming it. But what is the ultimate benefit, and what does it give you, of providing BNPL to customers?

Increased Sales

Regardless of any payment method, your loyal customers would shop from you regularly, but how much they spend with you is not generally guaranteed. These customers are likely to keep shopping for their favorites, but the availability of BNPL will affect their purchases' frequency or value.

Do you think loyal customers would shop with you without the possibility of cart abandonment, regardless of the payment method? Again, remember. Often even individuals in a secure financial situation can get to the checkout screen, remember they have an expensive cart, and shy away from a purchase.

Buying now, however, paying for later opportunities will raise the chances that consumers will spend. In a survey of the customers using BNPL finance, 31% of customers won't be buying all the products at a stroke.

Increased Customer Interaction

You're not alone if you've ever loaded your cart with goodies on your favorite e-commerce site only to get to the checkout and balk at the price. Many customers are excited about their shopping unless they are confronting with the amount they need to pay for the purchase. Although BNPL operates in a way similar to credit cards with no real savings option, consumers are far more likely to pull the trigger because of the psychology behind paying later for a single purchase.

After the BNPL options are accessible for shopping, the desertion of carts is reducing tremendously. It is leading to a profit gain without cost increases. One survey showed that 48% of consumers allow the availability of BNPL to impact buying decisions, suggesting that almost half of your prospective customers may be affected by the availability of your payment option one way or another.

Better Customer Experience

Why is it so critical for your customer experience to be better? The development of meaningful customer interactions creates loyalty and facilitates company repetition.

From a customer's viewpoint, more places to shop, more ways to pay, and more items to choose from are all better factors. Offering clients the opportunity to shop and pay the way they want also indicates a rise in satisfaction and, ultimately, income. Because of inadequate payment choices, an estimated 6 percent of carts are abandoned, which says a lot about how much consumers trust several ways to pay.

Ultimately, what choices you have is up to you and your target audience, for instance, Millennials are much more likely than their Baby Boomer parents to choose mobile wallets, so the more choices are offered, the better. Purchase now, pay later is only one more option that consumers would like to see. Leaning on this growing trend will provide you with fantastic customer experiences that build a base of returning shoppers.

Final Takeaway

As the field of e-commerce continues to expand and modify, it is not shocking that this involves payment methods. For years, digital wallets have been on the rise, but trends have not stopped there; today, more clients favor buying now, paying later than ever before.

Though paying later ideas are not exactly new while shopping now, credit cards have been viable buying choices for decades. Customers on the fence about a purchase will find the incentive needed to click "Buy" with the lure of low payments, working like short-term loans with flexible repayment options.