A major trend in retail recently is the growth of “buy now, pay later,” or BNPL for short. It is an old idea with a very recent spin. In this article, we’ll look at how it works, and how to ensure you are using it safely and effectively.
Understanding Buy Now Pay Later
Time payments have been around since the dawn of retail. For example, Henry Ford popularized the automobile over a century again by making his Model T – and car payments – available to the working man. Today, of course, much of the modern world runs on credit, with an average credit card balance of nearly $4,000 per adult in the US.
While credit enables consumers to buy things, BNPL enables retailers to make more sales using credit. In return for a fee, often ranging from 2%-8%, a third-party firm validates the customer’s creditworthiness and offers them time payment terms over a period of months – and in the process, helps the customer buy now without increasing their traditional credit card balances.
BNPL has a lot of advantages for both the merchant and the consumer. For one thing, it increases sales and reduces cart abandonment, particularly around high-expenditure periods like holiday shopping seasons. It also takes much of the financial risk away from the merchant, since the BNPL firm pays upfront and shoulders the risk of collections and chargebacks.
It has also grown very quickly, particularly in a post-pandemic world where retailers of all sizes are transacting more business online. According to statistics from The Ascent, it has grown by nearly 50% since mid-2020 alone, with more than half of consumers surveyed using it. It is well-liked by consumers, with over half planning to use it again in the next year, and over 60% feel it could replace their credit cards. Notably, 61% of respondents would prefer using a branded BNPL service directly from the retailer.
Making the most of Buy Now Pay Later
BNPL is often a very convenient solution for merchants nowadays, often opening the door to more sales and revenue, particularly for big-ticket goods such as electronics. The BNPL merchants profit as well, with revenue streams including merchant fees, finance charges, and hefty late fees, as more consumers try to conserve their cash and credit card balances.
At the same time, the very nature of BNPL – facilitating big-ticket purchases that the consumer takes home immediately – makes it ripe for fraud and identity theft. Chargeback Gurus points out that even with the BNPL provider taking on many of the financial risks, you still risk your reputation with customers who are victimized by identity theft. Moreover, providing accurate, genuine customer data is important to maintaining your relationships with BNPL providers. And of course, BNPL providers themselves have critically important needs for contact validation and fraud prevention.
Ensuring You Don’t Pay Later
Service Objects contact data quality solutions are engineered to stop fraud before it starts, so YOU don’t pay later. Our services include bundled solutions such as Lead Validation and Order Validation verify and cross-reference multiple data points, giving you a quantitative confidence score to inform your processing decisions. In addition, tools such as our flagship Address Validation services make sure that your contacts are correct and deliverable, helping to ensure customer satisfaction, timely payments, and accurate shipments.
All of our solutions can be integrated with popular ecommerce and business platforms using plugins and API interfaces, with expert installation assistance, available 24/7 support, and guaranteed 99.999% uptime. Best of all, we let you pay later too, with a free 500-transaction license key to test-drive any of our products on us, together with complete documentation and sample transactions right on our website. Visit us online or contact our friendly product experts, and see how we can help you make the most of your BNPL solutions.