According to a study of J. P. Morgan, three out of four Spaniards (76%) shop online now more than before the pandemic and the digital channel already accounts for more than 10% of sales in sectors such as retail. In fact, the number of Spanish citizens who have transformed their purchasing habits has even increased and 62% of the population of our country already buys from a PC or mobile phone, with an average expenditure per inhabitant of 1,791 euros per year.
In this scenario, flexible financing methods have become a spearhead for the market. Not in vain, according to Worldline, a 30% growth in BNPL adoption is expected by 2028.
And what is the BNPL? This financing method, which means “Buy Now and Pay Later”, is nothing more than, on the outside, a flexible payment option for consumers and a business opportunity for stores.
But, as always, behind an innovative technology, such as this financing formula, there is much more. On the one hand, for online stores, adopting BNPL can increase the average ticket in a typical trade by up to 45%, as well as getting global sales to grow between 3% and 5% thanks to incorporating BNPL. In addition, the recurrence of customers can even double.
In other words, the BNPL is a great market facilitator for stores. This technology offers a shopping experience unparalleled until now. The client is placed at the center of the decision, since he chooses how much to pay each month and for how many months, so he can control his finances in a personalized way. Here the social conscience of financial institutions also comes into play, which must take advantage of technology to know the borrowing capacity of each client to avoid overexposure to risks.
If we return to the user experience, flexible financing should be considered as an additional means of payment to the existing ones. The advantage is that it is an easily adaptable module that does not require additional development, so any store can include it to increase its business. Once installed, the customer experience is transformed. Accustomed to traditional credit applications, in which stores need to have innumerable paper documents and in which a response can take up to 72 hours, the fact that the customer can have a response in seconds is a revolution in the purchase .
But BNPL doesn’t just stop here: we are already seeing how some physical businesses offer it for payment in stores and it is even entering B2B commerce. Although to achieve a full take-off it would be necessary to bet on a real open banking, in which thanks to the use of OCR, digital signature and the possibility of accessing the client’s digital banking in query mode to know the debt ratios, it is facilitated decision making and risk reduction.
And speaking of risks, merchants should also take some considerations into account. For example, it is important that they choose a multi-entity BNPL solution, which allows the purchase to be crossed with different financing options, which doubles the acceptance ratios compared to solutions in which there is only one credit provider behind. And they must also be careful when choosing the platform, as some applications generate traffic from their marketing activities to specific segments with high purchasing power or high demand generation, but who keep the customer’s data and handle it themselves, so it is likely that they can redirect our customers to other competing businesses that pay better commissions.