With so many of us living payday to payday, even some essentials can become a tight fit in the budget; so treats like new clothes and holiday’s become out of the question.
This is where “buy now, pay later” options come in. These services offer customers the ability to order items online, without having to pay for another 30 days. Sometimes even allowing users to pay in installments. This method means that customers can order a higher number of items than they perhaps normally would. They can try them at home, decide what to keep, without having to worry about the money leaving their account.
Swedish company, Klarna, has over 200,000 retailers working with them. Including big names like Asos, Topshop, Gymshark, Superdry, and even Expedia, along with smaller companies.
Why Buy Now, Pay Later?
This type of shopping is proving to be appealing, with Klarna reporting to see a 16% increase in average order value and a 20% increase in shopper’s frequency. Similar results were found in our case study.
Buy now, pay later options offer an alternative to credit cards which can very quickly obtain additional fees and interest. This option simply runs a soft credit check and has no interest fees, making it an easy option for the customer.
The Payment Methods Report 2019 found that a third of UK shoppers perceive this kind of service as a convenient way of spreading costs when making more expensive purchases. Nearly one in five say that the availability of different finance options is the most important factor when making big-ticket purchases.
Despite positive attitudes towards buy now pay later options, online retailers still have problems with basket abandonment. With mobile devices causing particular problems. Customers are getting part-way through the payment process, only to ‘abandon’ their basket before completing the purchase.
Basket abandonment can happen for a number of reasons. However, anxiety and guilt surrounding purchases may be partly to blame. 52% of millennials worry they are unable to afford their order and worry they will regret it later. They then end up abandoning the order.
However, pay later solutions are diminishing this feeling. 20% of millennials say they would feel less guilty if they were able to defer the payment. A further one in five reports that they’d be more likely to go ahead with a purchase if they knew they had the option to pay in installments.
The payment process is a vital stage for eCommerce websites and is the make or break point for generating sales. Providing payment options for your customers creates a more seamless checkout and means they can make purchases at any time, no more waiting until payday.