BNPL IS INCREASINGLY ATTRACTING CONSUMERS
In recent years, the BNPL (Buy Now Pay Later) system has experienced remarkable growth. According to the Bank of France, in France, this method of staggered payment represents 4.5 billion euros of transactions per year. In Europe, the BNPL market was worth around €15 billion in 2020, according to some estimates. This figure is expected to increase over the next few years due to the growing popularity of this payment method. If B2C e-commerce sites were the precursors of split payment, it is clear that this solution
payment is now attracting the interest of traditional entities and historical players. What do you need to know about Buy Now Pay Later?
WHAT IS THE BNPL PAYMENT SYSTEM?
BNPL is one of the new payment methods in vogue today. It allows customers to make a purchase, spread a payment over time or make a payment at a later date. This payment can be made in installments through several payments, or via a single payment made once. Payment is then generally made within 30 days from the date of purchase of a product or service.
In reality, Buy Now Pay Later is an instant credit solution. By granting micro-credits in just a few clicks, BNPL meets the expectations of consumers who now favor flexible and intuitive payment solutions. For this reason, this alternative to traditional credit is favored by many consumers in Europe.
This is evidenced by a study carried out by Kantar between November and December 2022 with 8,000 citizens from 9 European countries. According to this study, in France, 37% of consumers use Buy now, Pay later. In Spain and Portugal, respectively 30% and 29% of consumers surveyed adopt BNPL payment. Worldwide, by 2026, payments for products and services with Buy Now Pay Later are expected to reach $576 billion.
WHAT ARE THE BENEFITS OF BNPL FOR CONSUMERS AND MERCHANTS?
In a context where e-commerce and online payment methods are becoming the norm, split payment has many advantages, both for merchants and for customers.
Thanks to this form of credit, merchants can offer more flexible and faster payment solutions to their customers. Thanks to BNPL, they increase their conversion rate, the amount of shopping baskets and therefore their turnover. Buy Low Pay Later also reduces the costs inherent in B2B acquisition campaigns.
Likewise, if consumers benefit from reduced cash flow thanks to installment or deferred payment, merchants must be paid for the sale to be added to their balance sheet. In B2B, split payment service providers guarantee transaction financing to merchants. Concretely, even if BNPL allows consumers to spread payment over time, merchants are paid in cash by the suppliers of the offer.
In terms of benefits, BNPL is also a way to optimize the customer experience. For business leaders, split payment is a vector of growth and a way to position themselves internationally. In addition, it is a growing market, which shows interesting prospects according to The Payment Europe in 2021.
In a climate of recession, BNPL is a solution for consumers to amortize their daily expenses and the cost of pleasure purchases. Payment by split card allows them to balance their budget and purchase quality products and services, without the pressure of instant payment. It promotes better management of unexpected expenses. Buy Now Pay Later meets the need for immediacy that characterizes the credit market today.
WHAT ARE THE RISKS OF THIS PAYMENT METHOD FOR CONSUMERS AND SELLERS?
Despite obvious benefits, BNPL payment carries risks for businesses and customers:
- Unavailability of money when due for payment;
- The risk of penalties for customers;
- Failure to pay for companies operating in this market;
- The risk of over-indebtedness and unrealistic perception of expenses for customers;
Faced with these risks, the challenge for players in this market is to implement specific Buy Now Pay Later offers. Likewise, it is urgent for BNPL market players to anticipate ongoing regulatory developments at European level to regulate these new forms of credit.
SECTORS OF ACTIVITY WHERE IT IS INTERESTING TO IMPLEMENT THE BNPL PAYMENT SYSTEM
In its early days, split payment was popular in e-commerce and intended for financing large-value purchases. It was then widely used in sectors such as furniture, multimedia, household appliances and high-tech. Today, it lends itself perfectly to everyday purchases, but also to the sale of products and services by various companies.
Seen this way, BNPL payment can be interesting in sectors such as catering, fashion, lifestyle, interior design, freight, logistics, construction, agriculture, online work.
IS BNPL ALSO POSSIBLE IN PHYSICAL STORES?
In the past, this financing solution was intended for online sales and purchases. However, it is clear that the Buy Now Pay Later system has become democratized, to the point of extending to physical stores.
BNPL service providers can therefore form partnerships with companies and merchants operating at physical points of sale. In practice, this can be done by sending a payment link via SMS or email or by generating a QR Code sent by the merchant to the customer. BNPL is therefore a way to secure your payments as a merchant.
