Driving conversion, increasing sales and providing the best customer experience: all very important for online retailers. But having your own company also entails a certain social responsibility. Customers think the same. For example, research shows that they value it highly as companies in the interest of people and planet. You can therefore ask yourself whether it is responsible to offer a payment tool with which your customers build up a debt, as is the case with BNPL. In this section, we’ll explain how to help customers use this tool wisely.
Buy Now Pay Later: Why Shoppers Love Using It
You may have already noticed: Buy Now Pay Later (BNPL) is under fire. The reason for this is that this payment tool creates a form of consumer debt just like credit cards, mortgages and student loans. As a result, not all BNPL users have positive experiences with the payment method. Yet this form of borrowing is not necessarily a bad thing – you just have to deal with it responsibly.
Don’t know BNPL yet? No problem – the name says it all. Via Buy Now Pay Later, customers only pay for their purchases afterwards, often without interest or other additional costs.
Flexibility is the keyword: BNPL offers shoppers more payment options. They decide how and when they pay. This flexibility ensures that BNPL continues to grow. One thing is certain: customers are fans. From our own research shows that the payment tool is being used more and more, and other studies show that BNPL is especially popular among younger consumers.
Another important advantage of BNPL is that many providers do not charge extra costs. This makes the payment method an attractive alternative to other payment methods where customers build up consumer debt, such as credit cards. This is because high interest rates apply.
The growing reputation of BNPL also plays a role: because more and more retailers offer the payment tool, its use is increasing.
Criticism of Buy Now Pay Later
The main criticisms:
– BNPL encourages people to spend more money than they have
– Clear regulations regarding BNPL are lacking
– BNPL providers do not always communicate transparently about interest and costs
– BNPL providers don’t do thorough credit checks
Let’s face it: these criticisms are justified. Indeed, the flexibility of BNPL can tempt people to spend more money than they have. And while there are regulations in some countries – such as Australia and the United Kingdom – this is not the case everywhere. In the latter case, there are no rules regarding transparency about costs, the amount owed by customers, credit reports and payments. Some customers even state that they are being held liable for costs they do not understand.
So how do you do it right? Let’s take a look at Klarna, the BNPL provider Mollie works with. In a candid blog post writes Alex Marsh, head of the UK branch of the Swedish payments company: “I really believe that BNPL is a better and more sustainable way for consumers to borrow than other payment options where you build up a debt.” Klarna does not charge interest or other fees for their ‘Pay in 3 parts’ and ‘Pay in 30 days’ products. So customers never have to pay more than the price of the item they buy. “And if you don’t make a payment on time, we limit your access to the payment method. Our standard rate to pay off the outstanding amount is less than 1%, much lower than credit card companies,” said Marsh.
Klarna: helping customers buy responsibly
Klarna is a good example of how to responsibly offer BNPL products. The company clearly states that it is a financial product, informs customers of the terms and conditions and offers simple payment arrangements to help them manage their money. These are all things you can do as an online retailer to inform your customers about what they agree to when using BNPL
Buy Now Pay Later Using Responsiblely: A Retailer’s Guide
By offering BNPL products on your website, you can help customers manage their finances responsibly. For this it is important that you mention the following:
– the full terms and conditions
– an extensive payment arrangement
– the advice not to spend too much money
It is now clear that BNPL is here to stay. The payment method is becoming increasingly popular and is a great way to offer your customers more flexibility. In order to stay ahead of the competition, many e-commerce companies today are even forced to offer BNPL. This is especially true in sectors where the method is most commonly used, such as fashion, technology, beauty and household goods. It makes sense to give your customers all the information they need to handle their money responsibly. Being clear about how BNPL works builds trust between you and your customers. That in turn leads to more sales and makes them able to find your website again and again.
Grandir avec Mollie
With Mollie you add Klarna: Postpay quickly and easily to your website and process payments immediately . You only pay for successful transactions, with no hidden costs. Knowing more? Contact us and discover how our easy payment solution can grow your business, or read our e-commerce tips to increase your sales.