Impact Of Buy Now Pay Later And How Retailers Can Benefit From This Cash Flow.

Buy Now Pay Later, a type of short-term financing solution is making the rounds of the market for all the good reasons. This excellent solution enables shoppers to make purchases without requiring them to pay for the same upfront. Instead, the shopper can make a fraction of the payment and proceed with paying the rest at specified future dates, often interest-free. 

Initially, only larger corporations were offering the buy now pay later or BPNL solution. But, since more and more BPNL providers like Klarna, Afterpay and Affirm started emerging, BPNL became increasingly popular among small businesses, too. 

If you are still hesitant about implementing BPNL financing solutions with your current operations, then we hope that this blog will help you rethink your decision.


How does Buy Now Pay Later work?

Buy Now Pay Later is just an alternative that enables your customers to purchase from you and pay for the same in instalments. 

Unlike conventional credit cards that require creating an agreement between the customer and bank, BPNL is just between the consumer and merchant, not to mention the intermediary company. BPNL operates quite similar to a loan. 

Almost a decade or two ago, service providers like Afterpay and Klarna started providing these services. And since, their popularity has only increased, especially since e-commerce came into existence. 

These companies take around 5% to 6% of the total purchase costs from the retailers in exchange for offering interest-free loans to the customers.  

How does Buy Now Pay Later benefits the business?

As mentioned above, BPNL solutions-providing companies tend to take a cut from the profits. This leads to many merchants and retailers second-doubting the implementation. 

But, you must know that there are various benefits associated with using buy now pay later solutions as a business owner. Let’s check what these benefits are:

  • Drives sales: The first benefit of offering buy now pay later financing solutions is that it makes your shopper feel confident in making bigger purchases. Since the payment of the product your shopper chooses to buy is spread over a long period of time, the financial impact is minimized. Yes, we agree that there are people who prefer to save money and then buy things they wish to. But, modern customers are looking for immediate results instead of traditional saving tactics. 
  • Improves trust and relationship with customers: With the buy now pay later financing solution, you make your customers return to you for further purchase in future. They know you have the option, so why would they not opt for it? 
  • Get paid in full: Buy now pay later simplifies the payment for customers, but you, as a merchant, still get paid in full immediately. In short, it is a win-win situation for both the customer and the merchant.
  • Remain competitive: If you aren’t offering to buy now pay later financing solutions to your customers, then you are losing out various potential sales to your competitors who are already offering these services. 

How does Buy Now Pay Later model benefits the B2B transactions?

Similar to how to buy now pay later benefit the customers, it benefits the merchant or retailer in a variety of different situations, too. 

For instance, if your retail business lacks the necessary cash flow to buy the required inventory for the busy season ahead, BPNL provides you with the solution to stock up confidently. You will be able to pay off the debt taken to purchase the inventory after a busy sales period. 

To be precise, buy now pay later functions quite similar to taking a business loan, except there is no interest you need to pay. This makes BPNL an extremely attractive option for businesses that struggle with cash flow every now and then.

Will Buy Now Pay Later result in bad debt?

No matter how many advantages you may experience from using the buy now pay later financing solution, it is important to bear in mind that it is a loan. 

Same as how consumers are required to carefully plan their purchase in sync with their expected expenditure and income, you, as a merchant, must calculate project sales and profits to make sure that you aren’t spending more than your means. 

With that being said, having this model can prove a great way of increasing your profits in low-risk situations. 

Buy now pay later gives your business a chance to survive in this competitive business landscape by being up-to-date with the trendy solutions that customers are looking for. 

Wrapping up

It is evident from the blog that Buy Now Pay Later manages to offer various benefits to both shoppers and e-commerce merchants and retailers. 

If this blog was able to change your mind about offering Buy Now Pay Later financing solution, then it is time to meet reliable service providers to proceed further. 

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