What retailers need to know about buy now, pay later (BNPL).

What retailers need to know about BNPL

BNPL solutions have become table stakes for today’s savvy consumers who want affordability, transparency and convenience when making purchasing and financing decisions on big-ticket items.

According to the Citizens Point of Sale Survey, 62% of consumers prefer fixed monthly plans with clear payment terms. When payment plans are backed by a simple and seamless transaction experience, 76% of consumers say they are more likely to make a purchase.

For retailers, BNPL can widen the customer funnel while driving repeat purchases and increasing AOV. Transaction volumes in the BNPL space have increased dramatically in the last three years and are expected to grow by 92%, from $353 billion in 2019 to $680 billion by 2025 (according to fintech research firm Kaleido Intelligence).

BNPL offers the opportunity to boost bottom lines and gain a competitive advantage. However, not all BNPL solutions are created equal. Gaining an edge depends on having a strategic focus and carefully assessing options to make sure an offering meets customers’ needs and aligns with a business’s capabilities.

Affordability may be the biggest draw for BNPL users, but it’s important for merchants to lead with a point of sale (POS) financing solution that meets the needs of their target customers. Knowing the highest impact target demographic – and creating a purchasing experience that satisfies the targets’ expectations – will make the difference in bringing in new customers.

The primary areas where customers are seeking a smoother transaction experience include:

  • Speed. Once in the funnel, digital-first consumers are looking to check out as quickly and smoothly as possible. Convenience is a top priority for BNPL shoppers and adding more steps to the funnel can easily lead to missed conversions and abandoned carts. While most BNPL products promote easy checkouts and applications, there may be big differences in speed and simplicity that can impact the point-of-sale experience.
  • Higher limits. Different cart sizes attract different demographics and ultimately that cart size can affect a customer’s decision to purchase. Not all financing companies can finance larger purchases so it’s good to do the research and verify the limits align with customers’ preferences.
  • Clear terms. Transparency and trust are crucial for creating impactful purchasing experiences. A business’s POS financing solution should match its brand’s values and meet customer expectations for clarity and openness. Customers favour BNPL, in part, because it clearly lays out how they are going to pay off a purchase. But if a provider isn’t up-front about terms and conditions, it adversely reflects on a brand and sales.
  • Stability. With rising costs, sky-rocketing delinquent accounts, and heightened scrutiny from regulatory agencies, BNPL’s from fintech’s are faced with unavoidable challenges. Conversely, BNPL’s from established banking institutions are at an advantage because of their stability, experience, and balance sheet as a known and trusted lender.

Merchants must also think about the expense and how much a new payment method is going to cost to set up as well as service financing. BNPL companies that rent bank charters pass those costs along. However, BNPL’s that operate with a bank charter don’t need to outsource financing, and in turn pass those savings to merchants.

Depending on a business’s size and the complexity of its offerings, customization is an important area that requires analysis and review. One-size-fits-all solutions are readily available but might not fit the requirements of larger retailers with many diverse needs. And it may not help to differentiate customer experience from the competition’s. With the ability to accommodate product upgrades and bundling, device as a service and other sales growth strategies, some POS financing solutions can deliver more momentum for merchants looking to increase customer frequency and the average order value (AOV).

With over a hundred years of experience in consumer financing, Citizens Pay was designed with both the consumer and merchant in mind. It’s a strategic approach centred on strong partnerships and helping retailers develop a tailored BNPL for their businesses.

For Citizens Pay partners, that means the ability to fully customize the solution to their unique needs and offer a product that seamlessly integrates into any sales channel including mobile, online, in-store, call center or in-home.

Citizens Pay also comes with the backing and reputation of an established bank, and its ability to finance and service customers confidently and cost-effectively.


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