Digital technology allows today's consumers to get what they want when they want it. They have more choices and more channels to pursue them than ever before.
This expanded choice landscape has shifted consumer expectations, resulting in a new type of modern buyer: one that expects to purchase big-ticket items without having to worry about credit card interest rates or fees. Consumers want to be satisfied with not just what they buy, and the price they pay, but also how they pay. "They want to be able to live their lives and make the purchases that are important to them, but also want to understand how they’ll pay them off," said Andrew Rostami, president of Citizens Pay.
To gain an edge over the competition and strengthen their reputation, businesses need to find the tools that can give consumers what they’re expecting. According to data from a Citizens survey, 76% of U.S. consumer respondents said they would be more likely to make a purchase if they were offered a payment plan with a seamless point-of-sale experience. Buy now, pay later (BNPL) can help businesses modernize payment processes by providing customers a flexible and manageable way to pay at the point of checkout.
Implementing a BNPL option can help meet expectations for diverse payment options by giving customers a more transparent, budget-friendly and responsible way to pay for large-ticket items. According to Rostami, BNPLs are particularly appealing to younger demographics who "want a payment option that lets them know upfront exactly what they’re going to pay and how it can fit their budget." Consumers can break up their purchase into predictable payments at the point of sale and still walk away with their purchase.
Here are four ways BNPL can enhance the customer journey, help merchants boost their sales and ultimately improve the customer experience:
1. Greater spending power
According to pymnts.com, 87% of today’s consumers between 22 and 44 would like to be able to break up large purchases into monthly installments. A BNPL gives shoppers greater spending power by enabling them to buy that big-ticket item with the ability to pay it off over time through low, fixed monthly payments without requiring a credit card or having to manage multiple loans. This not only results in greater customer satisfaction but also an increase in immediate sales and average order values for retailers.
"When you’re giving the consumer a more affordable way to make the purchase, they're more likely to come back to you," Rostami added.
2. Greater control and transparency
Flexible BNPLs offer a reusable or virtual line of credit that can be used many times for new purchases and can be granted without causing friction or delay to the shopping journey. For the customer, this creates greater ease of use while translating to more repeat business because they gain the confidence they need to make multiple large-ticket purchases.
"The customer really wants more control and more transparency," said Rostami. "They're looking for alternatives to the typical credit card where they rack up debt."
Rostami also pointed out that a BNPL provides that alternative method because they give consumers "clear terms so they know exactly what they’re going to pay over the life of the purchase."
3. An omnichannel solution
Many retailers have had to adopt omnichannel strategies in response to the changes brought by COVID-19. As a result, a growing number of retailers are leveraging BNPL to help their customers make the larger purchases they desire.
"A BNPL solution offers merchants a sophisticated way to accelerate sales and drive repeat customer behavior and loyalty across all of their channels," Rostami noted. "It gives consumers the option to choose a monthly payment plan at the point of sale, whether online or at a brick-and-mortar store, which results in a more satisfying and convenient shopping experience, as well as greater confidence in their purchases."
4. Simplicity and sophistication
Today's consumers expect payment methods that are clear and simple, but they also expect sophisticated options. BNPL delivers a quick, straightforward and frictionless payment process as a viable alternative to traditional payment methods.
On the merchant side, the right BNPL can be easily integrated into existing retail systems or customized for more complex systems. "This creates a seamless process from end to end and delivers high levels of customer satisfaction," Rostami said.
Buy now, pay later enhances the customer journey
Businesses know they need to go beyond just providing a good customer experience. They need to provide a superior experience that meets today’s consumer expectations, and payments are a great place to start. BNPLs that provide a financially responsible option for making big-ticket purchases can help merchants significantly improve the customer experience, which can lead to higher transaction values, a larger pool of potential customers, fewer abandoned purchases and increased customer loyalty.