How has BNPL impacted the ecommerce industry?
For retailers worldwide, Buy Now, Pay Later (BNPL) has become the preferred payment method for consumers, with platforms like Klarna and Paypal leading the way in omnichannel shopping experiences. BNPL allows consumers to purchase goods online and defer payment over time, interest-free. This stress-free and straightforward payment structure resonates with the common consumer need for financial flexibility.
Since its surge in popularity during the COVID-19 pandemic, the BNPL market has shown consistent growth, with its market share projected to increase from 2.9% in 2021 to 5.3% by 2025. Offering BNPL options at checkout has become essential for many businesses, especially those targeting younger demographics, as nearly two-thirds of BNPL purchases are made by Millennials and Gen Z.
Understanding the appeal of BNPL
Consumers are seeking seamless online shopping experiences that provide them with the flexibility to select from a variety of payment options. For ecommerce businesses looking to scale their platform, it’s crucial to consider offering payment methods that enable a good digital customer experience. Introducing BNPL payment options can help achieve this goal by:
Boosting conversion rates and increasing ecommerce sales: Incorporating BNPL into the checkout process can boost your conversion rates by 20-30%. Consumers are drawn to the prospect of paying later with interest-free instalments, making BNPL an attractive option for many businesses. The flexibility of split payments encourages customers to fill their carts with more items, presenting excellent opportunities for up-selling and cross-selling, ultimately resulting in increased sales.
Gaining a competitive edge: Ecommerce businesses that do not provide BNPL as a payment option are at risk of losing customers, with over 40% of potential buyers abandoning their carts if BNPL is unavailable. By offering BNPL options, businesses can enhance the customer shopping experience, catering to a broader range of customers, especially among younger demographics. Giants in the ecommerce industry, such as Amazon, have already ventured into the BNPL realm. Embracing BNPL presents an opportunity for businesses to adapt to the changing landscape of ecommerce.
Increases Customer Loyalty: BNPL payment options tackle common pain points for customers, especially when facing large purchases with limited financial resources. Offering this flexible payment option not only builds trust but also fosters customer loyalty. Moreover, many BNPL providers sweeten the deal with loyalty programmes, incentivising repeat purchases and strengthening the bond within your customer base.
Is BNPL right for my business?
BNPL payment methods offer significant benefits for most ecommerce businesses, particularly retailers dealing in high-value goods and services like luxury items or travel fares, as well as those aiming to boost their average cart size. By offering BNPL services, you can cater to your customers’ needs, driving sales and fostering long-lasting relationships.
The role of integrations in BNPL
At e2y, we specialise in designing and implementing payment connectors tailored to our clients’ needs, aimed at enhancing the payment options available to their customers. We collaborate with trusted Payment Service Providers (PSPs) such as Nuvei, Checkout, PayPal, and others that offer BNPL services, including Klarna. Our integration process focuses on utilising the SDKs and APIs provided by PSPs. This approach aims to enhance the overall experience for both merchants and customers.
As BNPL continues to gain popularity, businesses must adapt to meet the evolving demands of modern consumers. With the support of integration solutions we provide here at e2y, ecommerce businesses can seamlessly integrate BNPL services into their platforms, ensuring a smooth and efficient payment experience for all parties involved.
