BNPL. The “Buy Now and Pay Later” mentality. I’m sure we’ve all been there before. I’ve certainly, most definitely been there.
Wanting to buy that sweet-ass gaming desktop, rigged with the latest graphics card (GEFORCE GTX 1080 TI of course) and hardware but didn’t have enough money?
Feeling disappointed and sorry for yourself?
While now you can! (not the disappointment bit)
With just four easy payments of $500 of course!
Well, you probably heard these exact words on t.v, being berated at you by a salesperson trying to sell products. The BNPL mentality, or most commonly referred as a layby. Or even more commonly referred to as “I’m poor, but f*&#! It “.
Layby has been around in bricks and mortar stores for ages. It has been a staple for many people who wanted to buy things and pay it off over a period in retail stores.
But now eCommerce such as Amazon are beginning to adopt this approach and are offering similar options to consumers. Except they can receive their packages before paying for them.
The Rise of ZipPay Retailers
There are many companies that are offering the Buy Now Pay Later (BNPL) systems, and many of the eCommerce platforms are now adopting this style of payment. Yes, these payment platforms get customers instant gratification with immediate delivery of the purchase. Giving your customers the freedom to choose their payment method is just another way to build loyal customers and grow your business. Making customers happy and increasing sales. But on the other hand, it is extremely manipulative to consumers. When money’s tight, it can be tempting to take advantage of “buy now pay later deals”. So is it good for business?
The current two Australian platforms that are offering these services are AfterPay and zipPay, which require integration into an online store checkout. Merchants are charged with a fee that varies with the value and volume of transactions processed through the platform.
For the customer, it involves simple selection of these BNPL options at the checkout (like how you would choose PayPal) then selecting the desired payment plan. Both AfterPay and zipPay accounts are free for customers to create accounts with and use. However, there are fees for late payments or outstanding balances.
There is no doubt BNPL systems are an added convenience to the customer. But for a business to host layby internally is a big credit risk. The beauty of AfterPay and zipPay is that they bear all fraud and credit risk of the transactions, and guarantee upfront payments for their merchant customers.
This comes as great news for smaller businesses that don’t have the resources to build nor host such layby online.
The potential for zipPay and Afterpay is huge, and the online retailers are grabbing the opportunity and reaping the most out of it. The reported uptake with AfterPay for online retail was 20 to 40 percent of total sales. So far AfterPay has a total of 1,400 retailers onboard while zipPay has 2,000 merchants.
However, results will vary between industries like with all business strategies. So before a business should take a leap into AfterPay or zipPay services, here some things you should consider. The price point of the product offering, customers’ purchase behaviour online, and finally, ensuring you have the right traffic going into your online store to get the most out of your BNPL merchant subscription.
The BNPL mentality. Giving yourself the option to buy things you can’t afford. Whether you see it as a manipulative tool utilised by businesses or a better way to purchase things in general, as a consumer it is always nice to have options.
You might as well take it and just treat yourself.
Warning: Buy Now, Pay Later racks up Debt nearing $1 billion over the coming Christmas holidays.
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