In an increasingly competitive marketplace, retailers are now facing the challenge of capturing and maintaining market share and keeping their customers loyal. The good news is that since its global popularization in 2020, Buy Now Pay Later (BNPL) has become a real game-changer for merchants looking to boost their business.
For shoppers, BNPL is a seamless payment method that helps break up their purchases into several installments, bringing more cash flow and budgeting flexibility. But for retailers, BNPL, when white-labeled, opens the door to opportunities for better brand equity, increased customer conversion and retention rates as well as stronger relationships with customers.
This is how merchants can reap the benefits of BNPL solutions in today’s ever-competitive market.
Say Farewell to Cart Abandonment, Welcome Loyal Customers
Customers that have a positive point-of-sale financing experience are more likely to repeat purchases from that retail brand if the BNPL option is white-labeled for the retailer. Giving consumers a positive BNPL experience includes offering high approval rates, transparent terms and attractive rates. To this end, retailers are increasingly turning to white-labeled multi-lender BNPL solutions, which maximize consumer acceptance rates and optimize terms by redirecting the customer application from prime lender to secondary lender.
Merchants offering BNPL services experience an average of 20% to 30% higher conversion rates and a 30% to 50% increase in average ticket size.
Customers see prices at two critical junctures in the buying process: when they visit a product page and check out. If they are presented with a BNPL option at the same time, they are shown a much more digestible price. This removes hesitation for the customer, meaning that merchants that offer BNPL could see cart abandonment rates decrease by nearly 40%.
Let’s say that a freelancer has an old laptop that slows down their work and they do not have enough available cash flow to currently replace it. This is when BNPL comes into play: It allows people to make large purchases without having to wait for their next paycheck while enabling them to avoid paying credit card interest.
The Door has Opened to In-Store BNPL
Consumers have come to expect more flexible payment options in brick-and-mortar stores as well. Retailers that offer white-labeled in-store BNPL in addition to offering it online can build their brand equity, and increase sales, Average Order Value (AOV) and customer LTV (lifetime value).
Providing a consistent user experience and financing across retail channels also helps merchants build brand equity. When customers know that they will have the same BNPL options anywhere they shop with the merchant, this builds positive brand associations and nurtures customer loyalty.
The majority of consumers who have used BNPL services have expressed interest in using a BNPL option at a physical store. As many as 94% of consumers that shop online state that they would use BNPL, if offered, at the retailer’s brick-and-mortar store.
Although the solution is the same, customers tend to perceive online and in-store BNPL differently: When consumers shop online, they typically consider BNPL predominantly as a payment option. But when shopping in-store, they see it as a value-added service that the brand is giving them, as a part of the overall tactile brand experience.
Empower Your Customers
Customer-centric companies are said to be 60% more profitable, which means that a merchant’s success also lies in understanding their community’s needs, expectations and preferences.
In this sense, payments have earned their spotlight. Modern customers want more optionality when it comes to finalizing the checkout process. More than 100 million people around the globe have found the answer in BNPL, as it helps users better manage their cash flow and increase their purchasing power.
The best part? Some BNPL platforms allow users to finance big purchases, such as a new sofa or a TV, without having to pay the full amount upfront. Make no mistake, when using a BNPL provider, merchants get paid immediately and do not take on any financial risk since the lender collects the installment payments directly from the consumer.
BNPL that is embedded, white-labeled for the merchant and promoted from the start of the customer journey — for example, from a specific product page — through to checkout serves as an effective marketing and brand-building tool for merchants. Customers are motivated to purchase from that merchant from the moment they enter the online store.
Merchants that view BNPL as a powerful brand-building tool and not just as another payment option to add to checkout will benefit from increased customer loyalty. Unlike direct-to-consumer BNPL vendors, white-labeled BNPL providers remain behind the scenes, ensuring that the consumer engages only with the retailer’s brand.
Yaacov Martin is the CEO and Co-Founder of Jifiti, a global fintech company that enables banks and lenders to deploy any loan program at any merchant’s point of sale. He is a thought leader, panelist and active contributor to leading payments and fintech publications. He has authored bylines for TechCrunch, Payments Journal, The Fintech Times and The Paypers, among others.