With the explosion of eCommerce has come the widespread consumer adoption of Buy Now Pay Later (BNPL). BNPL allows a consumer to make a purchase and receive the product immediately but stagger the cost of it with regular multiple instalments.
Crucially, purchases do not incur interest or require any upfront fees for the facility. While the purchase can be made in-store, its uptake is being particularly driven by online shopping where buyers can apply for and take up the BNPL option at the checkout.
Who is driving this growth?
BNPL is particularly popular with millennial shoppers. Data from BNPL provider Laybuy shows that 57% of all 25-34-year-olds have used a BNPL service – with more than a third (34%) doing so more than once. The average Laybuy customer is 33 years old.
Why is it booming?
BNPL services have been popular in Australasia for several years, however, its popularity in the UK and Europe is more recent. This can be partially explained by substantial growth in online shopping, the effects of the gig economy, as well as younger generations being less likely to want to use credit cards.
Additionally, societal changes are playing a role – Laybuy’s research shows 31% of Brits now budget weekly.
Ian Butler, our Head of EU Security and Customer Servicing Products, has predicted that acceptance of BNPL as a normal method of buying and paying will only increase into 2021.
Benefits for consumers?
BNPL gives consumers the freedom to buy what they need - without interest - in a way that suits their budgeting and income. It also allows consumers to spread the cost of purchases without needing a credit card, allowing them greater flexibility to make an unexpected purchase or make a purchase in the knowledge of income ahead, such as a monthly pay or a tax return.
Benefits for businesses like yours?
Laybuy’s research has shown the Average Order Value (AOV) for fashion retailers offering BNPL has increased by 22%, as customers are able to buy the items they want and need without delay, knowing they can budget for the cost over several weeks.
Along with customers making higher-value purchases, merchants are also likely to see higher conversion rates and reduced cart abandonment by enabling an additional, popular payment option for customers.
While the BNPL concept is proving popular in traditional retail, such as fashion and leisure products, there’s huge potential for other industries to benefit. Consumers, particularly within the younger age brackets, are beginning to expect to pay for experiences such as concert tickets, luxury hotel stays, and flights via BNPL. So it’s an opportunity for businesses to convert these consumers.
How does it work?
BNPL technology can be easily integrated with eCommerce platforms and payment gateways. After that, customers will have the option to choose BNPL at the online checkout.
Elavon can also provide an in-store BNPL experience through our contactless-enabled card machines.
Who is Laybuy?
An Elavon partner, Laybuy was established in New Zealand in 2017 and launched in the UK in the following year. Laybuy enables consumers to make a purchase today, receive the product immediately but pay for it over six weeks, entirely interest-free. Laybuy is available online as a payment option within a retailer’s website or in-stores through the Laybuy digital Mastercard card, and is now live with more than 8500 merchants globally.
Intrigued to see how it could work for you?