Services like Klarna and Afterpay allow you to purchase items now and pay for them over time — who said your business cannot offer that convenience? While these services can be useful, it’s important to understand the terms and conditions before offering them. So, if you’re considering offering a “buy now, pay later” service, read on! Here is an overview of how “buy now pay later” services work and the pros and cons of them for your clients.
Buy Now Pay Later for Your Business: Should You Implement That?
Yes, if. That “if” is principally significant, as you cannot know if your clients want that from your business. Deciding requires additional research: it is wise to see what people want, by scanning social media. For instance, the #buynowpaylater hashtag on Instagram has 292,290 posts — sufficient material to analyze and make an informed decision.
You may use the hashtag research tool for free to find resembling materials. Of course, Instagram is not the sole source of that information. You can also pick some of the best Twitter analytics tools to cover more thoughts your actual or potential clients share on other platforms.
Now, picture being a customer who considers asking for such a service. Let us explain how all that functions — and you will find the answer immediately.
What Is a “Buy Now Pay Later” Service?
A “buy now pay later” service or BNPL is a type of financing that allows consumers to purchase goods and services immediately but defer payment for a while. For buyers, it allows them to purchase without immediately coming up with the full amount. That can be helpful if the buyer needs to make a purchase but doesn’t have the funds available.
For sellers, offering a “buy now pay later” option can help increase sales, as it gives consumers more flexibility when making a purchase. Several different “buy now pay later” services are available, each with its terms and conditions. Before using such a service, it’s important to understand how it works and the repayment terms.
How Does The Service Work?
A “buy now pay later” opportunity, also known as a deferred payment plan, allows consumers to purchase an item and take up to a year to pay for it in installments. Under this type of plan, the retailer fronts the entire cost of the purchase and charges the customer a monthly fee. The customer then repays the retailer over 12 months with interest. There are several different deferred payment plans, but the most common are those offered by major retailers such as Amazon and Walmart.
While deferred payment plans can be helpful for consumers who need to make a large purchase but don’t have the upfront cash, they can also be risky. If customers fall behind on their payments, they may be charged late fees or penalties. In some cases, the retailer may even elect to pursue legal action. As a result, consumers need to understand all the terms and conditions of a deferred payment plan before signing up for one.
Key Benefits and Limitations of “Buy Now Pay Later” Services for Your Clients
Imagine that you are a client who wants to order something from your business. There are pros and cons to using the “buy now pay later” service.
On the plus side, these services can help you (your clients) to spread the cost of a large purchase over time, making it more affordable. They can also be handy in an emergency when you need to buy something but don’t have the cash on hand.
On the downside, however, “buy now, pay later” services often come with high-interest rates, which can end up hurting your (your clients) stashes more in the long run. The detriments might even get you into debt if you’re not careful with your spending.
Key Considerations Before Offering Your Clients to Use BNPL
Before grabbing a “buy now, pay later” opportunity, if your customers will consider a few things. Here are some of them.
1. Terms of the deal
Before you sign up for one of these programs, it’s important to read and understand all the terms and conditions carefully. Typically, “buy now, pay later” services require you to make minimum monthly payments. However, if you don’t pay off your balance in full within the specified time, you will likely be charged interest on the remaining balance.
In addition, many of these programs have late fees, so making your payments on time is important. By taking the time to understand all the terms and conditions before signing up for a “buy now, pay later” service, you can help ensure that you don’t end up paying more than you bargained for.
Your business task here is to ensure that your clients know all terms of the deal.
2. Repayment plan
One aspect that you might want to consider before using a “buy now, pay later” service is a repayment plan. Whatever your purchase is, it’s a good idea to make a budget and repayment plan in advance. That way, you’ll know exactly how much repaying is each week or month, and you’ll be less likely to miss a payment. If your situation does not allow determining whether you can afford the repayments, it’s better to err on the side of caution! After all, it’s not worth getting into debt just for the immediate pleasure of shopping.
Your business task here is to allow your clients to form a repayment plan with wise pricing.
3. Market price
While the “buy now, pay later” type of financing can be convenient, it is important to remember that it is not always the best option for customers. Many “buy now pay later” companies charge higher prices than other retailers. As a result, shoppers who use “buy now pay later” services may end up paying more for their purchases than they would have if they had shopped around. In particular, it is useful to check the price of a product on other platforms before using the services. By sparing half an hour comparing prices, you will ensure you are getting the best deal possible.
Your business task here is offering an optimal price without attempting to snatch more from your clients.
So, are BNPL services a nice offer your clients may want to use? If your business remains fair to them and you contribute more to clarity, then the answer is a solid yes. Plus, never neglect to imagine yourself being a customer — that will help you understand them better!