How does the Buy Now Pay Later Feature of the Ecommerce Platform Work With the Point of Sale?

Ecommerce stores these days are getting immense popularity due to various services they are offering that also includes payments methods they are offering to the consumers. That means the things which are quite old are getting new again, and this thanks goes to e-commerce adoption of buy now, pay later, which is similar to the financing of large products like cars and houses.

It is true that due to the expansion of new payment opportunities, ecommerce stores are standing out of the crowd as every customer has different economic needs. So, keeping all the above things in mind, let’s take a deep dive into the world of buy now, pay later with the point of sale.

What is buy now,  Pay later Shopify?

The term buys now, pay later, also called BNPL, refers to when customers are taking home the business products but paying the amount of that product over time. In other words, it is a micro-credit instrument. This facility is for customers that help them to buy any product just like a credit card. 

In this, the BNPL providers allow customers to make multiple payments equal to the total cost of a purchase order. However, in most cases, the customers will get the product right away, and they are locked into a fixed payment schedule for the total cost. In this case, the final cost that customers have to pay is slightly higher than the actual price. 

But there are many companies like Sezzle who offer interest-free payments without any hidden fees. 

How does buy now, pay later Shopify work?

The core tenet of BNPL service allows customers to pay the total amount over time so that customers can easily afford what to buy. However, if you talk about the credit period of BNPL service range from 30 days to 36 months which wholly depends upon the transaction size. So, let’s talk about how it usually works: –

  • Customers purchase at any of the participating retailers
  • Select the option of buy now, pay later
  • Have to do some down payment of the overall purchase amount
  • Finally, the remaining payment is deducted over the period of time in interest-free EMIs

Well, some individuals think that credit card and BNPL service are the same. But in reality, they are different, which you will come to know from the below chart.

Difference between Credit Card and BNPL

There are specific differences between credit cards and the ‘Buy Now, Pay Later. Let us take a look at them:

Credit cards                                         BNPL
  • Hidden charges are levied on credit cards
  • BNPL follows a transparent and low-cost 

pricing model

  • You must have a good credit history to avail a credit card.
  • It is not mandatory to have a credit history
  • Credit cards come with more flexible acceptance
  • BNPL services/facilities are provided by select 

e-retailers and fintech organizations

  • Credit cards come with a standard interest-free period
  • Interest – free credit period can go up to 48 months
  • Getting approvals is slightly difficult
  • Easier approvals
  • You have the option of paying only the ‘minimum due’ amount
  • You have to pay the fixed EMI on the scheduled date
  • You can earn cashback, reward points, Airmiles on purchases
  • No such benefits

Benefits of BNPL to customers

The main reason why customers like BNPL is that they will get the products they want within their budget. According to the report by Sezzle, around half of the shopping, car abandonments are due to high prices, and two-thirds of young people don’t have a credit card. So, in this case, BNPL is like a boon for them which will allow them to buy their favourite products with flexible payments. 

Overall, the customers have the option to pay the total amount with flexible terms that range from 3 months to multiple years, which depends upon the provider. However, the best part is the customer will get their product without completing a full payment. 

Apart from that, some of the other benefits of BNPL are: 

  • Increases affordability
  • Simple and transparent process
  • Safe and secure transaction
  • Instant access to credit
  • Can choose repayment tenure
  • No cost EMI

Benefits to retailers

According to the report of metrics PayPal, around 42% of their BNPL customers would not buy anything if there is not an option for the credit-related offer. Apart from that, approximately 56% of the customers will likely buy from that store again who offers credit-related opportunities.

So, you can say these days people love to buy things that offer BNPL service by which stores are getting a number of benefits. They are: –

  • Their overall sales are increasing as customers are buying new products now and then. Due to this, the store conversion rate is rising.
  • Business is getting new customers as the BNPL option is attracting new customers who previously hesitated to buy as they cannot pay the total amount at one go.
  • Stores are getting loyal customers as BNPL offers a seamless nature of the customer experience, which makes customers repeat the purchases.

Final words

Buy now, pay later option Shopify is the best way to make new customers and make a high profit. Apart from that, through this service, the eCommerce store can introduce their new products so that people who don’t have a credit card or have a tighter budget can buy their products. Overall, it helps the store increase conversions by which business can reach on top within no time.

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