The Best Buy Now Pay Later Tools for Ecommerce
Your customers want to pay in installments, this let's them do that.
What are the best Buy Now Pay Later tools?
Buy Now, Pay Later tools are an emerging category that blends the original practice of using a credit card or loan to ease your up front cash flow, but they ultimately operate as stand alone purchases where the 3rd party is like (but not actually) a new, one-time credit card for that specific purchase. The reason it is not actually like a credit card is because the installments are typically fixed and in some cases there are no fees, and in some cases it does not require a credit check to use this payment option. You will need to look at each individual tool to see exactly how they assess the users risk profile and approve their installment payment. I believe, in all, or at least most cases, you get paid immediately and carry no risk. Typically though, these companies charge a premium on top of your typical payment processing fee. For example, if you usually pay 2.9%/transaction, you might be paying 6.5% for a transaction through a Buy Now Pay Later tool, but it is typically worth it as these tools prove to increase conversion rate and average order value.
Buy Now Pay Later
Buy Now Pay Later tools create a sort of "Blue Ocean," often capturing a segment of your site visitor that wanted to buy, but didn't really have the budget right now. And those that do have some budget, may find themselves adding another product to the cart before checking out with a Buy Now Pay Later tool.
You can use a Buy Now Pay Later tool at any stage of your business, most of them work as a percentage of sales that get processed through them. These tools have proven to resonate more with younger generations and those who may not have their own credit card. And naturally the older generations are less likely to adopt the tool. That doesn't mean it hurts your conversion rate to add the option to your site though.
Because they typically charge some sort of additional markup, you need to calculate how this impacts margin - which typically it has an overall positive increase on margin, but for low margin businesses, or one product businesses, maybe you can't recoup the marginal impact.
Companies with higher average order values benefit greatly from this tool, my sweet spot is when you're right over $100, maybe under $500. That is a really good spot to use a Buy Now Pay Later tool. That said, these tools can work for even lower average order value stores, and there are a subset of tools that cater to the larger purchases - typically those are more like a true credit line or loan.
This is an interesting tool category that kind of brings the whole team together. Marketing may push to install the tool, you need your head of Ecommerceto green light changes to the site. You need to talk with Finance on how this will impact payments and change processes. And you need to inform customer service on how to deal with issues realated to this tool.
You should be looking for tools that are extremely user experience oriented. My preference are tools that offer 0% cost to the customer and don't do a credit check. You also want to make sure this tool integrates with your Ecommerce platform - Shopify, BigCommerce, etc.
Still unsure what’s right for you?
to help you find the right tools to grow your store.