Fast and flexible payment options have become more important to customers and essential to multi-store retail growth. In particular, ‘Buy Now Pay Later (BNPL)’ solutions such as Afterpay and Zip Pay.
In Australia, BNPL has reached critical mass, with 1.8 million users and an expected growth of more than 120% this year. Both shoppers and retailers agree that customers who use BNPL tend to spend more, buy more, shop more frequently and be more loyal to retailers who provide it. (1)
Rise of the Millennials
Leading the market share in growth for BNPL are Millennials (Gen Y) with 40.6% users, followed by Gen Z with 35.1%. (1)
By 2020, it is estimated that Millennials will have the highest spending power globally. With 90% avoiding credit products by choice due to cost and risks, many are turning to BNPL options as a better way to budget for the items they want.
What is the value of BNPL to retailers?
-90% of online shoppers continue to use BNPL on subsequent purchases. (2)
The growing popularity and demand for BNPL options has been disruptive to traditional payment solutions, and here’s why:
- Increased conversion — BNPL payment solutions provide shoppers with the opportunity to purchase something they would have otherwise walked away from.
- Increased transaction value — having access to credit means customers are prepared to spend more on the things they want. (3)
- Increased potential customer base — by opening up to new payment channels, retailers can encourage new audiences to shop.
- Repeat sales — BNPL builds relationships with customers who keep coming back for more. 90% of Afterpay’s transactions are from returning customers, who on average shop using Afterpay 9 times in a year.
- Fewer abandoned online purchases — 75% of all shopping carts are abandoned prior to purchase. BNPL improves these conversion rates. (4)
- Minimising risk and fraud — BNPL payment solutions manage all fraud and credit risk so you can scale your business with less risk.
How does BNPL enhance the customer experience?
– 80% of retailers say that BNPL is something their customers want. (2)
The benefits of BNPL payment options help drive a more enjoyable and seamless customer experience. Here are the reasons why:
- Fuels the need for instant gratification — with an increase in choice, shoppers can use BNPL to take home the items they really want, without having to reach in their savings.
- Reduces friction in the shopping journey — shoppers don’t have to wait, miss out, or awkwardly discover they don’t have enough money for their items at checkout.
- Allows controlled spending — the worry of receiving a surprise bill at the end of the month is eliminated, which is one of the attractions of BNPL over credit cards.
- No / lower fees — most BNPL services charge zero or lower interest fees which again makes them an attractive option over the major credit cards.
POS and BNPL Integration
Omni-channel POS software such as Retail Express that has direct integration to the leading BNPL services such as Afterpay and Zip Pay allows you to create a seamless and faster payment experience for your customers in-store and online. The powerful Business Intelligence functionality of Retail Express also means retailers can leverage valuable customer and product insights from purchases made through each BNPL service:
- An intelligent product search and up-selling and cross-selling engine recommends the most relevant range of products to suit BNPL customers.
- Powerful profiling and marketing tools send highly targeted campaigns to offer the most relevant products and offers over the BNPL customers’ lifetime.
- Implementation of advanced loyalty programs to ensure BNPL customers are rewarded and form long-term relationships
- BNPL purchases can be identified and compared with other payment methods with the platform’s unrivalled reporting capabilities.
Beyond BNPL services, Retail Express has an extensive range of direct integrations to Tyro, Shopify, Xero, MYOB and many more leading retail software applications. By creating an integrated retail technology stack with best-of-breed solutions in each key area you can dramatically improve business profitability (check out this blog to see how). View our full range of integrations here.
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