Buy Now, Pay Later is a short-term financing method in which buyers can purchase things or services and pay for them over time. This type of financing can be helpful for buyers who need to make large purchases and for sellers to ensure they are paid on time. There are several options for Buy Now, Pay Later, so it’s essential to research the best one for your needs.
What is Buy Now, Pay Later, and how does it work?
Buy Now, Pay Later (BNPL) allows consumers to purchase items or services and pay for them over time. They are integrated in webshops, and when a buyer makes a purchase, they have the option to select a deferred payment plan and choose how and when they would like to pay. Meanwhile, the seller receives the payment from the BNPL provider within a certain period regardless of the payment plan chosen by the buyer.
Some BNPL plans may have interest rates, while others do not. Before enrolling in any plan, read the tiny print to ensure you understand the terms and conditions.
The advantages of Buy Now, Pay Later for sellers
There are several benefits of using BNPL as a seller:
- The BNPL provider takes care of your financial risk, so you don’t have to worry about chasing invoices on late or defaulted invoices.
- You always get paid on time regardless of when your customer pays, so you can better manage your cash flow.
- You will be protected from fraud with the help of speedy credit checks on all your customers before they can select the option to defer payment.
Should you use BNPL as a seller?
BNPL is certainly on the rise as buyers are expecting – more and more – an efficient checkout process and flexible checkout options. In fact, many sellers report much lower cart abandonment rates and much higher conversion rates when they integrate BNPL into their webshops. But you may be wondering if BNPL is for you.
If you are running into these problems, then BNPL may be worth considering:
You are always chasing late invoices
Regardless of whether we are in the B2C or B2B space, late invoices are a constant source of headache for sellers. If you are always finding yourself chasing late invoices and never receiving payments on time, you can consider working with a BNPL provider. When you work with one, they take over financial administration for you, including chasing invoices, answering buyer queries, and more.
You have cash flow problems
If you have cash flow problems from late payments, BNPL may be the way to go. When you work with a BNPL provider, you get to allow your customers to select a deferred payment option while you get paid on time, all the time. This is because BNPL providers act as the middlemen in all transactions – your customer pays the BNPL provider, and the provider pays you.
You’re a small team and you don’t have time to manage it all
When you allow your customers to pay on credit, you must perform a credit check to make sure they will pay you as they have promised. This is true especially for big-ticket purchases. But credit checks can be tedious and take days to complete. By the time you’re done with them, your customer may be long gone. BNPL providers perform credit checks on your behalf, and there are good ones out there who can do so in seconds with machine learning. This way, you can spend your time focusing on growing your business.
What are the different BNPL providers?
Several types of Buy Now, Pay Later providers are available to sellers in the B2C and B2B spaces.
- Afterpay: With Afterpay, your customers can make purchases online or in-store and then pay for them in four equal instalments over eight weeks.
- Affirm: With Affirm, your customers can finance purchases online or in-store and then pay for them over time.
- Klarna: With Klarna, your customers can make purchases at over hundreds of retailers online and split their purchases into 4 interest-free payments.
- Biller: If you are a B2B seller, you can get in on BNPL too with Biller, where your customers can defer payment for up to 90 days at no cost to you as a seller. You still get paid within 30 days.
How to integrate BNPL into your webshop
To get started in the BNPL sphere, you simply need to contact a provider that suits your company’s needs (for example, if you are a B2C webshop, you may want to contact Klarna, while if you are a B2B webshop, you may opt for Biller). You can onboard with them quickly, and they will be able to guide you in next steps.