The buy now, pay later business model has swiftly become the preferred method for growing small businesses briskly. However, things are not always as simple in reality. Consumers can purchase a product immediately but delay payment until later with “buy now, pay later” services. The payments are usually made in installments that are agreed upon at the time of purchase, and they are interest-free if they are made by a certain date.
Take a look at some of the greatest advantages of buy now, pay later before implementing this unique strategy.
What is the Buy now, Pay later model
The term “buy now, pay later” is used to describe a service that enables consumers to purchase a product now, but delay payment until later. These payments are typically done in advance and pre-arranged installments at the time of product purchase, and they are interest-free if made within a certain time frame.
Buy now, pay later, often known as installment loans, are becoming more and more common since technology makes it possible to offer rapid, seamless experiences both in-person and online.
How does buy now, pay later work?
The concept of “buy now, pay later” divides purchases into equal installments. Customers often complete a quick online application, which has no effect on their credit score unless they miss their payments on time. Late fees may also be assessed for nonpayment.
What are the advantages of buy now, pay later for small businesses
- Attracts new customers
Being a very alluring and lucrative proposition, buy now, pay later is very attractive. It enables customers who would not otherwise have access to immediate finances to purchase goods that they can pay for later, aiding small businesses in gaining new clients.
- Boosts sales
Sales will be directly impacted by a business’s ability to attract more customers. Because it makes things more accessible and so draws in a wider audience, particularly young people, buy now, pay later for small businesses is an effective approach to boost sales.
- The abandonment of a cart reduces
Customers frequently put products in their shopping carts but never really make a purchase because there aren’t any handy ways for them to pay. In addition, the expensive cost of having several items in a basket can discourage a buyer. Instead, by making BNPL available, you provide customers a practical payment choice, which can lessen the risk that they will leave their carts unattended.
- Affordable, flexible payments for costly products
The benefit of BNPL is that it increases the order conversion rate for expensive, high-end products. Companies can enhance the likelihood that pricey products will be purchased by making them more accessible by spreading payments over several months.
- Higher than average order value
The AOV, or Average Order Value, of a consumer rises as payments are smaller and spaced out over time. The average amount a consumer spends when making a purchase is known as AOV. BNPL boosts a customer’s purchasing power and hence has a favorable impact on AOV.
The demand for skills to support the growth of the FinTech sector is increasing. buy now, pay later apps are wonderful for business owners, especially those who sell products online. They can lower the number of abandoned shopping carts, raise AOV, and promote repeat business. Most require a transaction fee, but all are able to pay you in full, and most cover chargebacks and fraud.