Are you new to online shopping? Do you love checking the latest products that online portals offer and compare the pricing? Does buying online help you monitor your purchases? If yes, we intend to give you a glimpse through the e-commerce world and its latest trends.
E-commerce websites have exploded in popularity over the last 5 years, with most retailers taking to the online environment. The other aspect that has made online purchases more appealing is the fact that they are being supported by a number of different methods for making payments online. The process where the money is instantly transferred from one account to the other, from the buyer to the seller, is a drastic development. The concept might still retain the essence of how it all began. But the online payment methods and the payment processing strategies have changed over time.
One of the strongest new developments in online payment segment is the ‘buy now pay later’ trend. The millennials are the commonly seen consumers utilizing this method new.
The concept is as simple as the name indicates – the consumers buy products that they want and choose to make the payment in smaller installments over time. The retailer creates a tab in the payments category and allows consumers to be able to choose to postpone their payments through services such as Afterpay, Zippay, and others. The concept is not new and it has been followed on a smaller scale in various parts of the world. There are stores that work purely on this strategy. The concept works on the basis of trust and allows their loyal consumers to make payments after the actual purchase. The commercialized method which doesn’t put the retailer at loss is the recent evolution of ‘buy now pay later’.
Popular online payment methods that people use are credit and debit card payments, and mobile wallets. Mobile wallets are handy when it comes to taking care of smaller payments. But the only limitation is that this is not a true one-click payment method. If you are regularly using the mobile wallet for your daily purchases, there are times when there might be a deficit in the money in your wallet. This is when you might have to add money to your wallet before proceeding to make the payment. In the case of buy now pay later option, you can instantly place the order by choosing to pay later.
Credit card payments are often used when people prefer converting their payments to EMIs or simply to postpone their payment to the future. Postponing the payments or breaking down the payments can be very useful particularly in the case of large value transactions like say while buying a smartphone or other gadgets. But this is only possible for those who own a credit card. Buy now pay later offers a similar advantage even to those who do not own a credit card.
This would allow consumers to buy a smartphone that is currently popular in the market by searching for retailers that offer afterpay for phones. Once they have found the shop they want to purchase it as they can choose the payment method of Afterpay then pay the amount in 4 smaller payments over a longer period of time, often up to 6 months.
If you are a business owner evaluating the advantages of using the buy now pay later strategy here are some to know about:
As the e-commerce segment is getting competitive, losing consumers is very easy. It is a tight rope walk when it comes to customer retention. If you are not offering something that is currently popular around the world, you might be missing a few customers. You might also be losing several leads and potential customers.
There are third-party payment services that offer affordable plans to buy now pay later. These are plans that even small businesses can make use of. This means that your business would be running as always and the cash would still be flowing in despite deferring payments from the consumers.
The one major reason why businesses offer buy now pay later is to avoid cart abandonment. There are many consumers who simply terminate their purchase process halfway due to a shortage of funds. For example nearly every month there is a new smartphone released in the market, with many cool new features. Consumers are tempted to try out the new phone, and they might not always have the funds readily available. This is where having a buy now pay later option would make the sale happen. Therefore, for businesses that want to significantly boost their sales this payment trend is a plus. As an easy to integrate option, this one can visibly improve the conversion rates and make large value sales happen.
Consumers are also in love with this trend as much as businesses. This is one of the most convenient credit systems of payment available for consumers. There is no hassle of applying for a credit card to postpone the payments. There are no credit card fees to worry about. When there are multiple payments to a merchant postponed to a defined time in the future, consumers would be able to consolidate and streamline your payments. The whole process is also known to be quick, in fact, quicker than most other payment methods. Therefore placing an order even during a peak sale season would be easy. The consumers would not have to worry about stocks running out before they gather enough funds to buy their favorite smartphone.
It is true that there are plenty of advantages that the buy now pay later trend offers to both business owners and the consumers. But there is another side to this coin, and you should be aware of the limitations. If you are a business owner, remember that the transaction fee and the service charges would be higher for the buy now pay later providers. For the consumers, this option, much like credit cards, can make you lose track of your expenses. If the option is not handled cautiously, consumers are more susceptible to fall into debts. One thing we know for sure is that this is not another financial fad. Whether you are a business owner or a consumer, set aside your skepticism and be open to this strategy. But weigh the pros and cons to balance the payments made through the buy now pay later strategy.