What is BNPL?
BNPL ("Buy Now Pay Later”) services enable customers to defer or stagger their payments, often without extra fees, over a given period of time. This payment option provides extensive financial freedom and is ideal for balancing expenses or giving spending power a little boost.
Unlike traditional credit options, Buy Now Pay Later is directly part of the on-line shopping pathway, thus making its adoption simple and instantaneous. BNPL solutions are offered by a range of players, from conventional banks to specialist fintechs such as Klarna, Floa Bank and Younited.
Why is BNPL so popular with customers?
Payments in instalments are attractive to a growing number of customers, particularly in France:
- 70% of consumers already use split payment solutions and 44% use them on a regular basis. (Source: OpinionWay survey for Floa, 2023)
- In 2023, the global BNPL market was valued at $179 billion and is set to grow by 26% each year to reach $586 billion in 2030. (Source: Precedence Research, 2023)
The main motivations for users are:
- Maintaining spending power: BNPL can be used to manage significant expenditure without putting strain on the budget.
- Treating themselves: In the festive season, BNPL facilitates impulse purchases or gifts.
- Dealing with unexpected purchases: Ideal to cover unplanned expenses without having to wait.
What are the benefits for merchants and how can the most appropriate solution be selected among the many players offering BNPL?
For e-merchants, integrating a BNPL solution into their customer pathway may have a positive effect on performance:
Increasing the conversion rate
BNPL reduces the disincentives to purchases by providing an instant solution that overcomes customers’ budget constraints. Customers who hesitate are more likely to finalise their purchases if a split payment solution is proposed.
Increasing the average basket size
Payments in instalments encourage consumers to spend more. Our observations suggest that the average basket size increases by roughly 20% when the merchant offers a split or deferred payment solution.
Building loyalty and attracting new customers
Customers are looking for flexible payment experiences. Offering BNPL payments may attract new customers while building loyalty among existing customers.
How to choose the right BNPL solution
The Buy Now Pay Later market has plenty of players and each one has its own specific features:
- Long-standing players: Cofidis, Cetelem, reliable consumer credit specialists.
- Specialist banking subsidiaries: Floa Bank, the partner of many French e-merchants.
- Pure players: Klarna, Younited and Alma provide innovative solutions and sleek UX, suited to various customer profiles.
To make the right choice, consider:
- Your business sector and your customers: Certain players are more appropriate depending on the types of products or services you offer.
- The average basket size: Certain solutions are optimised for large amounts, and others for everyday purchases.
- Technical integration: Consult your Payment Service Provider (PSP) such as MONEXT for seamless and tailored onboarding.
