Buy Now, Pay Later (BNPL) has quickly evolved from a trend into a mainstream payment option. For retailers looking to boost conversions, increase average order value and offer customers more financial flexibility, adding BNPL can be a game-changer. But how do you actually get started? Here's a helpful breakdown.
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Understand the Demand for BNPL and Your Market
Identify if there is an opportunity to introduce a new payment method based on your customer behaviour. Are your customers shopping for higher-priced products? Is there a number of shoppers who abandon their carts when they reach the checkout page? If either or both of these behaviours are identified, then it could indicate that your customers would appreciate more flexible payment options. BNPL is not exclusive to larger retailers; smaller retail businesses and niche ecommerce sites can also benefit from this service.
Identify a Suitable BNPL Provider
There are different ways in which BNPL providers operate. Some have a transaction-based model where the merchant is charged a fee for each transaction, while others have a marketing-based model where the provider offers the merchant marketing support in exchange for using their service. Others assume full credit risk for the purchase. There are popular providers such as Klarna, Clearpay and PayPal Pay in 3. Each provider has a different set of fees and requirements. When selecting a BNPL provider, ensure that they have a good reputation, transparent terms, and a simple integration process.
When considering your integration options, consider whether you wish to handle the payment flow on your own website or if you wish to redirect your customers to the BNPL provider’s website. Many retailers find it easier to implement seamless plugins for websites such as Shopify, WooCommerce and Magento.
Consider Your Checkout Flow
The checkout flow is important for a smooth and efficient transaction. Ensure that your checkout flow is quick and easy for your customers to navigate. Display BNPL options alongside other payment options and avoid over-cluttering the page. Display the option to pay later throughout the customer’s journey, on product pages, in mini-baskets, etc. This will allow customers to be aware that they have the option to pay later and make it easier for them to complete the sale.
If you currently process credit cards via a payment gateway, then you can usually add BNPL by integrating with the same provider or a compatible plugin. Contact your current payment processor to confirm before duplicating any efforts.
Communicate Responsibly
Responsible communication is crucial with the growth of BNPL. Clearly communicate your terms to avoid confusion and to protect your business from potential negative publicity. Avoid making any false claims or misleading offers. The objective of providing a BNPL option is to create trust with your customers, not to pressure them to make a sale. Many BNPL providers provide you with ready-made marketing assets you can utilise on your website, emails and advertisements.
Track Performance and Stay Up-To-Date With Compliance
After implementing BNPL, track its success. Is the option resulting in more completed sales? Is your average order value increasing? Most BNPL providers provide a dashboard that provides insights and reporting tools on the performance of the service.
Additionally, keep yourself informed of any regulatory changes, specifically those from the Financial Conduct Authority (FCA). Although BNPL is not currently subject to regulation, it is likely to fall under greater scrutiny. Using a BNPL provider that is compliant helps to safeguard your offering for the future.
Conclusion
Integrating a BNPL service into your business is a strategic decision that can fundamentally alter how customers interact with your company. As long as you have implemented the service properly and communicated effectively, BNPL can add value to both parties involved in the transaction and differentiate you in a crowded marketplace.
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