There may be times when a customer may prefer not to use a credit card or may not have cash readily available to purchase your services or products. Does this mean you will lose their business? Not exactly. Some small business owners are now offering buy-now-pay-later (BNPL) as a payment option for customers. This payment option is very similar to layaway plans and can be a very convenient option.
This new payment method has recently become very popular with consumers. Research has shown that before the holidays, roughly 60% of US adults used BNPL. It is specifically popular for younger buyers in the Gen Z and millennial generations.
During the holiday season, it was found that BNPL plans increased by 21% from the previous year. This means that buy-now-pay-later services may be the right payment option for your business. You can choose to use popular service providers such as Afterpay, Affirm, Klarna, PayPal Credit, Zip, and many more to assist you with getting started.
When it is time for customers to start purchasing, they will have the option to either buy-now-pay-later or to simply pay by credit card or cash. If the BNPL is chosen, the provider you chose will do a quick online credit check. Once this goes through, the business owner will get paid in full upfront, the customer will leave with the product and will also leave with the commitment to paying off their new purchase.
The benefit of this payment plan is that it provides customers with more options to pay. It also helps you sell products that customers might not have purchased due to lack of funds up front. Although there are positives to this new plan, it is important to note that you could pay between 1.5% to 3% per transaction.
If customers do not pay back the amount by the end of their loan, they may be subject to penalties and interest which could hurt their credit. Although you are not personally penalizing your customers for being late on payments, it is important you are still upfront with customers and warn them so it doesn’t damage their outlook on your business.
If you are considering adding another payment method for your customers, it may be time to consider a buy-now-pay-later option. Take the time to look into the service providers that can assist you with setting up this payment plan and be sure that you are aware of all the risks for your customers This option can be a great tool to getting more customers interested in your products, especially those who may not have the funds to purchase an item the same day.
