3 Tips for a "Buy Now, Pay Later" Strategy for Your Retail Business

As online retail continues to grow, "buy now, pay later" (BNPL) providers have been gaining popularity as an affordable payment option. According to Ujjwal Dhoot, CMO of DXL Group, and Greg Lisiewski, VP of Global Pay Later Products at PayPal, retailers need to stay ahead of the curve and embrace new ecommerce payment options to stay competitive. 

Below are three ways that small businesses can benefit from BNPL: 

1. Attract Different Customer Demographics 

• One third of BNPL sales come from people under 30. According to Lisiewski, 70% of PayPal BNPL customers used it again within 6 months. 
• BNPL is a generational tool. Older generations are used to financing options like layaway at big retailers—online BNPL options are a modern take on a payment plan. 
• BNPL can also attract customers who are price sensitive. BNPL is a credit card alternative that expands payment options for customers. 

2. Encourages Spending and Larger Sales 

• BNPL allows customers to make a down payment on a purchase and continue payments on a monthly plan, usually for 3 months to 1 year. 
• Financing options can help with purchasing big ticket items, making them easier to attain and afford. But BNPL is not limited to large items and can be used for purchases of any dollar amount. 
• Generation Z is familiar with this payment method. They are part of a subscription world, says Dhoot, where their purchases are a fixed monthly amount, flexible, and transparent. 

3. Grow Brand Loyalty Through Transparency and Accessibility 

• Payments are the same each month, with no hidden fees, and are not as unpredictable as credit cards. Most BNPL providers only require a soft credit check, which expands the pool of who can utilize this payment option. 
• The availability of BNPL can increase a customer's lifetime spending with a business, resulting in increased loyalty and sales.
• Younger consumers value transparency from brands. Choosing a trustworthy BNPL company who will keep data secure can create lasting customer relationships. 

This article was written by Emily Gamb, a Regulatory Affairs Analyst at Acuity Insurance.