Running an online store is exciting, but it's challenging when customers abandon their carts at checkout. Take Mia, a marketing executive with a keen sense of style. While browsing an online fashion store, she discovers a stunning designer jacket priced at $1,000.
Its rich emerald green fabric and intricate gold embroidery captivate her. As she hovers over the "Add to Cart" button, hesitation sets in. Mia imagines how great she would look in that jacket, but her excitement is quickly overshadowed by anxiety about paying the full price upfront.
While she considers using a credit card, thoughts of potential debt and high interest rates make her uneasy. Frustrated and uncertain, she closes the tab, leaving that coveted jacket behind.
This scenario reflects a common dilemma faced by many young shoppers. What's the solution? Integrating Buy Now, Pay Later (BNPL) options at checkout can effectively address this issue.
According to eMarketer, 73% of US BNPL users are Millennials or Gen Z, highlighting the preference for flexible payment solutions. With the global BNPL market projected to reach $560 billion by 2025, now's the perfect time for e-commerce businesses to enhance their checkout experiences.
Let's explore trends, preferences, and practical tips to boost your sales.
What’s Hot in Payment Methods: Trends and Preferences
What makes shoppers pick one payment method over another? In 2023, digital wallets led global ecommerce payments with a 37% share, followed by credit cards at 32% and BNPL at 5%, based on data from Oberlo. BNPL is growing fast, especially among younger folks, while credit cards remain popular for their rewards and trust factor.
BNPL’s Big Growth
BNPL is growing, with projections estimating a $560 billion market by 2025, serving 622 million users worldwide, according to report by Fintech Futures. Here’s a regional breakdown:
- United States: Reports from Oberlo and GlobeNewswire say about 91.5 million shoppers will use BNPL in 2025, driving $118 billion in purchases, particularly for clothes and gadgets.
- Canada: BNPL transactions are expected to reach $7.5 billion in 2025, popular with younger buyers, according to Research and Markets.
- United Kingdom: Finder estimates that around 22.6 million adults (42%) have used BNPL, with transactions forecasted at $42.5 billion in 2025.
- Europe: Including the UK, BNPL transactions could hit $191.3 billion in 2025, led by Sweden and Germany, Research and Markets.
Credit Cards Hold Strong
Credit cards remain a major player in ecommerce. In the US, they’re expected to account for $403 billion in transactions in 2025, based on a 31% share of the $1.3 trillion ecommerce market, as per Oberlo. In Canada, credit cards contribute significantly to the $74 billion ecommerce market, while in the UK, they represent about 20% of the $341.6 billion market, totaling $68.3 billion. Across Europe, credit cards make up roughly 34% of the $721.3 billion market, equating to $245.2 billion. Shoppers love their cashback and travel points, ensuring their enduring appeal. Let's explore what draws customers to it.
Why Shoppers Love BNPL
Imagine Mia, a marketing executive captivated by a $1,000 emerald green jacket but deterred by its price tag and fears of credit card debt. If the online store had offered Buy Now, Pay Later (BNPL), she could have paid $250 upfront and $250 over the next three months, interest-free. This manageable plan would have likely sealed the deal, allowing her to own the jacket without financial strain.
Here's why BNPL clicks:
- Affordability: Splitting payments makes big buys like electronics or furniture feel within reach.
- Younger Shoppers: Research by eMarketer shows that 73% of US BNPL users are Millennials or Gen Z, and they love its mobile-friendly vibe.
- Easy Approval: BNPL often uses soft credit checks, so more people qualify.
- Trust Factor: reports by The Motley Fool show that over half (53%) of BNPL users prefer it over credit cards, and 62% trust BNPL providers more.
Credit cards, though, have their pull:
- Rewards: Cashback and points attract older shoppers.
- Reliability: They’re accepted everywhere, building trust.
Knowing what customers want is great, but how does BNPL boost your sales?
How BNPL Increases Sales
Cart abandonment is a headache—70% of shoppers ditch their carts worldwide. But the good news is BNPL can change that. Here’s how BNPL helps:
- More Sales: Offering BNPL can boost conversions by up to 30%, as estimated by RBC Capital Markets, especially when shown on product pages.
- Fewer Drop-offs: In the US, BNPL cuts cart abandonment by 10%, improving completion rates.
- Bigger Purchases: BNPL users often spend more, with average order values significantly higher than non-BNPL shoppers.
- Customer Expectations: Many BNPL users expect their preferred option, and its absence could lead to lost sales.
Credit cards can slow things down:
- Complicated Forms: Tricky forms cause 17% of shoppers to bail.
- Mobile Issues: Clunky mobile checkouts increase drop-offs.
Simplify your checkout with guest options, mobile-friendly designs, and security badges to build trust across the USA, Canada, UK, and Europe. What about BNPL rules?
Regulatory Landscape: What's Changing?
BNPL is new, so regulations are still being developed. Staying on top of them keeps your store compliant:
- United States: In 2024, the CFPB applied the Truth in Lending Act to some BNPL accounts for clearer billing, with more rules expected.
- Canada: Regulators are reviewing BNPL for clear terms, with changes expected.
- United Kingdom: By 2025, the FCA will treat BNPL like credit, requiring affordability checks.
- Europe: The EU’s Consumer Credit Directive demands clear disclosures.
Work with trusted BNPL providers and be upfront about terms to keep customers happy.
When to Prioritize BNPL
- You sell to Gen Z or Millennial audiences
- You offer high-ticket items (£100+)
- You want to decrease cart abandonment on mobile.
- You want to increase the average order value (AOV) during peak seasons.
BNPL fees (3–6%) can eat into profits, so check your pricing and customer base. Don't ditch credit cards, though they're still key.
Why Keep Credit Cards
Credit cards are a must for online stores:
- Rewards: Cashback and points draw shoppers, especially in the USA and Canada.
- Older Customers: Shoppers 45+ trust credit cards’ reliability.
- Subscriptions: Perfect for recurring buys like skincare or pet food.
- Wide Acceptance: They work everywhere, so no customer is left out.
Offering both BNPL and credit cards catches every shopper.
Ready to make it happen?
Best Ways to Add BNPL and Credit Cards
Try these tips to improve your checkout:
- Team up with Trusted Providers: You can browse our eCommerce Tech directory to get the best BNPL providers.
- Show BNPL Early: Add it to product pages and display logos at checkout.
- Keep Checkout Simple: Use guest checkout, auto-fill forms, and mobile-friendly designs.
- Test Messages: Try “Pay $X/month” vs. “0% interest” to see what clicks.
- Be Clear: List BNPL terms and return policies upfront.
- Reward Loyalty: Use credit card perks and BNPL deals to keep customers.
- Track Results: Compare BNPL and credit card sales to tweak your setup.
These steps create a smooth checkout for customers in Chicago, Toronto, London, or Berlin.
Wrapping Up
Today's shoppers want options that fit their needs. Some love credit card rewards, while others, especially younger folks, prefer splitting payments with BNPL to manage their budgets. Offering both isn't just about convenience; it's a smart way to boost sales and keep customers coming back.
Pair these payment methods with clear messaging, mobile-friendly checkouts, and quick approvals to turn your store into a sales powerhouse.
Ready to add BNPL? Check out our BNPL tools category to find top providers and take your store to the next level.
