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

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

According to the POS citizen survey, 62% of consumers prefer fixed monthly plans with clear payment terms. When payment plans are supported by a simple and seamless transaction experience, 76% of consumers say they are more likely to make a purchase.

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

BNPL offers the possibility of increasing its results and gaining a competitive advantage. However, not all BNPL solutions are created equal. Gaining an edge requires having a strategic focus and carefully evaluating options to ensure an offering meets customer needs and aligns with business capabilities.

Affordability is perhaps the biggest draw for BNPL users, but it’s important that merchants lead with a point-of-sale (POS) financing solution that meets the needs of their target customers. Knowing the target demographic with the greatest impact – and creating a shopping experience that meets target expectations – will make the difference in attracting new customers.

Key areas where customers are looking for a smoother transaction experience include:

• The rapidity. Once in the funnel, digital-first consumers seek to pay as quickly and easily as possible. Convenience is a top priority for BNPL buyers and adding more stages to the funnel can easily lead to missed conversions and abandoned carts. While most BNPL products promote easy payments and applications, there can be big differences in speed and simplicity that can impact the point-of-sale experience.
• Upper limits. Different basket sizes appeal to different demographics, and ultimately that basket size can affect a customer’s buying decision. Not all finance companies can fund larger purchases, so it’s a good idea to do your research and check that limits match customer preferences.
• Clear terms. Transparency and trust are key to creating impactful shopping experiences. A company’s point-of-sale financing solution should align with its brand values ​​and meet customer expectations for clarity and openness. Customers prefer BNPL, in part because it clearly outlines how they will refund a purchase. But if a supplier isn’t upfront about the terms and conditions, it negatively impacts the brand and sales.
• Stability. With rising costs, soaring delinquent accounts, and heightened scrutiny from regulators, fintech BNPLs face inevitable challenges. Conversely, BNPLs of established banking institutions are favored due to their stability, experience and track record as a known and trusted lender.

Merchants also need to think about the expense and cost of setting up a new payment method as well as financing the service. BNPL companies that lease bank charters pass on these costs. However, BNPLs that operate with a bank charter do not need to outsource funding and, in turn, transfer those savings to merchants.

Depending on the size of a business and the complexity of its offerings, personalization is an important area that requires analysis and review. One-size-fits-all solutions are readily available, but may not meet the requirements of large retailers with widely varying needs. And that may not help differentiate the customer experience from that of the competition. With the ability to accommodate product upgrades and bundling, device-as-a-service, and other sales growth strategies, certain POS financing solutions can give merchants looking to increase customer frequency and average order value (AOV).

With over a hundred years of experience in consumer finance, Citizens Pay was designed with both the consumer and the merchant in mind. It is a strategic approach focused on building strong partnerships and helping retailers develop a bespoke BNPL for their businesses.

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

Citizens Pay also comes with the backing and reputation of an established bank, and its ability to fund and serve customers confidently and profitably.