There has been a lot talked about when it comes to buy now, pay later (BNPL) and the potential advantage that it could have for merchants that offer it. However, simply adding a pay later button at the checkout is not enough to ensure you will get enough people clicking through, in the volumes you need, to make it commercially viable.
So, how can you make sure you’re attracting new users and not just cannibalizing your existing credit card sales? When it comes to BNPL, there are some key best practices that can help boost conversion and acquisition. Here are five ways to make sure BNPL works for your business.
When deciding which BNPL option to offer, make sure the split rate or thresholds match your price points and your customer requirements. Don’t just look at your providers’ conversion, order value and volume stats — ask about approval rates and how they compare with other payment methods. Measure, test, and prepare to iterate your BNPL offering until you hit your customers' sweet spot.
BNPL options are also more focused on some industries over others. Depending on your industry, it may be more important that you consider adding it to your checkout. For example, retail has seen real success in offering BNPL to customers. And, more recently, BNPL is expanding in the travel and hospitality sectors. Additionally, in countries where the government does not provide healthcare, BNPL services are being offered on healthcare treatments.
There’s lots of attention being paid to BNPL and consumer debt. Only 22% of people say they understand the terms and conditions associated with it. Your customers — and reputation — must be protected so make sure payment terms, late payment charges and fees are totally transparent and clear. Don’t reinvent the wheel though. Your BNPL provider should have consumer communication, in the right formats pre-prepared and responsibly crafted that you can customize for your brand.
You will also need to check whether or not the BNPL provider is regulated. Additionally, do they have affordability monitoring in place to ensure that customers can afford what they are buying?
Why wait till the checkout to make the sale? With dynamic on page messaging, you can push pay later further up the sales funnel to where customers are making their decision. Klarna says promotional messaging — including showing split payments on the product page — can raise AoV by 25%.
Be aware, though, how the payment journey can be affected should someone select BNPL as their payment method. The checkout process, in some circumstances, can be significantly lengthened risking cart abandonment. Make sure that you are optimizing any options you have at your checkout, including populating forms with information from the original purchase.
BNPL has an average Net Promoter Score of 30 which is much greater than common credit cards which had a score of 6 and overdrafts which had a score of -15. Add banners promoting BNPL on marketing, email and add campaigns to make sure customers know they can choose to pay later with you.
Fifty-four percent of merchants in the UK reported having their brand exposed to new customers through co-marketing activities, and 23% could track the direct referral of customers from their BNPL providers. Don’t miss out. Reach out to your BNPL partner and understand what support is available and how to access it. From entries in merchant directories to spotlight features, seasonal promotions and pop-ups. Consider how you will be able to increase the visibility and performance of the BNPL option on your company.
Want to find out more about optimizing BNPL? Read our guide to learn more.