With the advent of the internet market and rising e-commerce platforms, the excellent function of “purchase now, pay later” has gained popularity. Customers may shop online using the “buy now, pay later“ option, which allows them to make quick purchases and pay later through banks and EMI options offered on the brand’s PoS machines. Because clients prefer to spend online, these technologies enable a microcredit lending model, destabilizing the global credit economy, especially in India. Compared to 2020, it has increased by roughly 6% globally and is predicted to increase by 9% by 2024.
How It Works:
BNPL is a short-term financing option that lets clients pay for products in effortless installments rather than one lump sum. Consumers can pay interest-free installments over a certain period.
- Purchase at one of the partnering stores.
- Choose “Buy now, pay later” as the payment method.
- Pay a fair share of the total MRP as a down payment.
- The customer can pay the balance in a series of interest-free EMIs.
The Effect of “Buy Now, Pay Later” on Online Shopping
Impact on Businesses
Buy Now, Pay Later is a one-stop-point-of-sale finance solution for business outlets in the sector. It allows shops to provide a vision to their customers by employing a financial plan and spending in installments rather than one lump fee. It also boosts sales by giving the option of paying later to a significant number of cards from all major issuers. The BNPL service has lowered the usual way of making credit card payments by reducing credit card swipe charges. Businesses may use their POS systems to provide a wide range of pay-later EMI payment plans and a vast catalog of possibilities. The procedure may be completed at no expense and with little effort.
Impact on consumers
These platforms collaborate with banks, NBFCs, and economic institutions to assist the core business by offering payment and support services. Following the COVID-19 disaster, the market shifted its demeanor with respect to customer behavior, propelling e-commerce adoption and pushing digital purchases. This transition has also resulted in contactless deliveries, which ensure the safety of both delivery partners and consumers. Since the epidemic, people have been more rapid in obtaining necessities such as food, medications, and other things through e-commerce companies, whether voluntarily or involuntarily. Furthermore, the industry’s e-commerce giants pool their resources to provide new and creative financing solutions for their clients, thus expanding their market.
How is the transformation taking place?
Several company platforms, especially e-commerce enterprises, are embracing purchase-now-pay-later methods to enhance their sales platforms. The model gives convenience and flexibility to the customer looking for financial services, and it is the best option for someone new to the credit system. The credit financing system allows customers to acquire essential goods and pay later since the BNPL, or buy now, pay later, model works with low or no interest rates.
Following the pandemic, consumer spending patterns have effectively been reduced or suffered restrictions on basic and consumer durables. As a result, these appealing options place a greater emphasis on saving, allowing consumers greater payment flexibility. Furthermore, the catalog on the POS system provides consumers with a variety of alternatives, making their purchasing experience more convenient. Emerging shops give clients the flexibility and adaptability to choose the plan that best suits their needs, leaving them satisfied and relishing their shopping experience.
Due to technological advancements and artificial intelligence, the models provided by merchants have a lower risk of fraud and default. Furthermore, these devices are linked to several financial organizations with credible information about the buyer. As a result, their services are safe and deliver a superior user experience.
In a nutshell.
Every zealous merchant strives to gain customers by converting them into loyal patrons. Merchants can use the Buy Now, Pay Later feature to track new customers, improve return customers, and increase their average basket size. Customers who have a great purchase experience are more likely to return than those who go to another store that provides the same service. The ability to pay how and when they want, without incurring interest, increases spending power and provides customers with financial control. Unlike credit cards, which have hidden costs, BNPL models are more explicit about their prices and payment conditions. This alleviates concerns about the utilization of such financing methods.