Buy now pay later – new shopping trend

Have you ever wanted to buy something but didn't have enough money? We wonder, we hesitate? We surely have all experienced that moment.

Depending on the need, some people will try to buy by borrowing from friends, while some may decide to give up the item. So, is there any better way for consumers to help them reduce economic pressure but still can get their favorite things?

Of course, businesses are always quick to grasp the needs of consumers and offer instant solutions. As a result, "Buy now pay later" business model is becoming more and more popular and has established itself as a global buying trend.

Buy now pay later (BNPL) is an emerging business model in recent years, with names like Affirm, Afterpay, Split, and Klarna... BNPL helps to break down the payment to pay in installments and becomes a trend, especially for young people.

You should definitely think about using this very well-liked model in your PrestaShop store. This post will give you further insight into the buy now pay later business model, its advantages, and some practical modules you can use to implement this feature in your store.

What is Buy Now, Pay Later?

Just by reading the term, you can comprehend this shopping payment method. As the name implies, BNPL businesses allow consumers to make immediate purchases and can pay for the item in installments later.

This form is not new - the 0% Installment Purchase ads by finance companies are essentially a form of BNPL.

However, unlike credit card payments (where customers make recurring payments at the end of each month), the buy now pay later model allows you to pay in shorter installments (interest is incurred only if you pay slowly).

In short, BNPL is like paying with a 0% interest credit card, but with shorter payment periods, and only incurs interest if you pay late.

In general, BNPL does not help customers reduce purchasing costs, but only "stretches" that payment longer, allowing them to pay small amounts in short installments, reducing financial pressure on consumers, and absolutely no interest if paid on time.

For example, you are surfing the web, and you see an item that is quite satisfactory, but you do not have enough money at that moment. If the shop accepts BNPL payment through an intermediary service – for example, Afterpay, you only need to choose the payment method through Afterpay to be able to purchase.

For each order purchased through Afterpay, the buyer will only need to pay the total amount of the order in four installments over two months.

Regular BNPL will not charge interest if you pay on time. Unless you are late for payment, you will be charged late interest.

Advantages of the BNPL business model

1. Advantages of BNPL to consumers

• Allows shoppers to buy products immediately even if they do not have the financial capacity to pay the full payment.
• Payment is divided into shorter periods, corresponding to a smaller amount to be paid, reducing financial pressure on consumers. For example, AfterPay divides the bill into 4 periods, and Fundiin divides it into 3 periods.
• No interest is incurred if payment is made on time. Interest rates are also quite small if incurred. For example, with Fundiin, buyers are penalized 0.6% of the order value for each late payment, accumulating no more than 25% of the order value.
• No annual or hidden fees.
• Simple and fast registration process (average less than 5 minutes, much faster than credit card registration).
• Registration standards are not as strict as with credit cards. In general, BNPL companies only require customers to be 18 years old and the owner of a bank card (no personal income limit).

2. Advantages of BNPL to businesses

• Increase purchase conversion rates because customers are under less financial pressure.
• The average value per seller's order is likewise higher due to the higher conversion rate.
• The setup process is quite easy.

With the benefits that the BNPL business model brings, it is gradually becoming a popular shopping trend today and is a payment method chosen by many people. It has flourished recently during a time when the epidemic has had a significant impact on the entire economy, particularly among young people.

On the PrestaShop platform nowadays, there are a lot of modules that support stores to add this payment method like: “4 No-Interest Payments with Sezzle - Buy Now, Pay Later Module”; “Klarna Payments Module”; “Afterpay - Buy now, Pay later, Always interest-free Module”,... You can decide if you want to use this method on your website.

We hope this article is informative and can help you improve your understanding of the BNPL business model and its advantages. Thanks for spending your time reading it! Have a nice day!