You’ve probably already noticed that buy now, pay later payment solutions are gaining momentum – all it takes is one online shopping expedition and you’ll see BNPL everywhere from fashion retail checkouts to travel booking sites.
The numbers say it all: BNPL purchases accounted for $125 billion of consumer spending in 2021, set to grow to $3.3 trillion by 2030.
And this is having a longtail impact – as well as providing consumers with options at the final checkout stage, BNPL is starting to change the way they approach the shopping journey in general: 57% of global consumers believe BNPL could replace their traditional payment methods.
Here, we look at four key ways that BNPL is impacting buyer behavior, from the discovery stage to the final point of conversion.
1. Attracting customers across all profiles
Research shows that having a BNPL solution in the checkout can attract customers across all demographics.
Millennial and Gen Z consumers are the most likely to use buy now, pay later, as they’re more inclined to opt for a flexible option and budget-friendly way to pay for high value items.
While Gen X and Baby Boomers make up a smaller portion of the BNPL consumer market, trends indicate that this customer base is also growing.
Older, financially mature shoppers say they’re drawn to the credit score improvement and interest-free opportunities of BNPL – especially when it comes to solutions like Splitit, which allows you to leverage the balance of your existing credit card to pay for items in smaller installments.
2. Providing an alternative to credit and interest
Research shows that customers are looking for alternatives to traditional credit providers and high-interest loans – and this trickles into their choice of buy now, pay later providers.
Many BNPL providers offer an interest-free option, which appeals to consumers – this was the reason 80% of BNPL users said they chose it over other payment alternatives.
60% of consumers say they would rather use BNPL with existing credit cards, rather than open a new line of credit and 63% of people would use their credit cards more often if they can pay in smaller, interest-free installments.
Splitit’s model meets this expectation, giving customers the best of both worlds: there’s no need to take out new financing and Splitit will never change any interest on their BNPL purchase.
3. Increasing average order value (AOV)
BNPL installment plans provide more flexibility and freedom over managing payments, which provides new opportunities for people who may otherwise not be able to budget for big-ticket items.
For retailers, this can drive AOV. In a recent study, 78% of consumers said they “strongly agree” that BNPL allows them to make larger purchases. With Splitit, businesses see an average 50% higher average order value (at an average purchase price of $1,000).
4. Improving conversion
When implemented strategically, BNPL can help to drive sales at the final stage of the consumer journey and reduce the likelihood of those dreaded abandon cart stats.
It provides people with more flexibility and allows them to make choices that align with their financial bandwidth. Having Splitit in the checkout improves conversion rate at an average of 30%.
However, it’s not simply a matter of sticking buy now, pay later on the payment screen and letting the users do the rest.
Customers are looking for a simple, trustworthy way to pay in installments – 33% say they’re attracted to BNPL because of its ease of use and convenience. Which means it should be implemented exactly like that – in an easy-to-use, convenient way.
Declined applications, long forms, and confusing 3rd party navigation can result in friction at the checkout. On the flip side, a user-friendly flow, high approval rate, and quick process can boost conversion.
Splitit’s white-label solution hands the power and control entirely to your brand, resulting in a seamless BNPL experience.
As BNPL continues to spread across the retail landscape, consumer attitudes and behaviors will shift in tandem. By giving people more control over their spending and presenting new ways to leverage their finances, BNPL opens up a world of opportunity for customers and retailers alike.
Learn more about how Splitit’s installments as a service platform can bring growth to your business.