We are currently in the age of the payment technology revolution to make the purchasing process more seamless and user-friendly. Even before the covid 19 pandemic, a transition to digital payments was underway even though the trigger has accelerated consumers’ preference for seamless payment methods both online and in-store.
According to a study by PYMNTS and Paypal in 2020, the presence of digital payments impact 57% of customers’ decision to shop with merchants. A third of consumers reported that they would not shop with a merchant if they didn’t provide digital payments.
Buy now pay later services.
One of the new generation payment technologies is the buy now pay later. Although it started as an eCommerce trend, it is also getting widespread acceptance as a payment option by physical store retailers. With the growth of digital payments, the young generation of consumers has escalated buy now pay later and even using it to spend more per purchase. Merchants find it beneficial in fueling online shopping. For credit-averse consumers, most of the buy now pay later services don’t need approval, come with little to no interest, and do not pose a risk to their credit score as long as they make the payment in time.
Buy now pay later (BNPL) is a service that allows you to make purchases without raising the entire payment upfront. As the name suggests, you pay the amount later or in weekly or monthly installments. The standard buy now pay later interest-free offer may come in four installments whereby you pay the first one during checkout and the other three weekly or bi-weekly.
It seems like a credit card, but the consumer doesn’t have to go through credit checks and the exciting idea of no interest. Moreover, it encourages a customer to check out with a fuller cart than they had intended. It is convenient and fast because there are no confusing terms and hidden fees.
How fintech companies are contributing to BNPL
Despite the increase in demand following the pandemic that has boosted online shopping, buy now pay later fintech companies have been around. Many of them have benefited from the tremendous rise of BNPL since 2018. A range of fintech companies are normalizing the use of point of sale loans for everyday purchases. The inclusion of these apps in merchant’s websites makes their services more available to consumers.
Businesses don’t have to rely on credit card companies and banks to make their products more affordable to consumers. Many of them are turning to fintech companies to provide consumer financing instead, which has proven to be a fast and convenient option. As buy now pay later continues to grow, we can expect companies to come up with exclusive partnership rewards and alternative banking products such as daily spend cards to boost customer retention.
The retailers are doing an excellent job by partnering with fintech companies to facilitate buy now pay later and make the shopping experience seamless and flexible for their customers.