Over 9.5 million consumers have transacted more than 33 million times with the buy now, pay later products. ![]() According to PayPal’s latest earnings call, since the launch of buy now, pay later, the company has processed approximately $5.4 billion in total payments volume (TPV), with $2 billion of that TPV in Q3 2021 alone. ![]() More recently, usage of Pay in 4 has gained momentum ever since PayPal introduced their BNPL solution. Through their acquisition of Bill Me Later back in 2008, PayPal first started offering users credit lines with special financing options. How PayPal’s Pay in 4 bundles consumer and merchant valueīNPL is not a new concept. This is why partnering with the right provider is a critical decision for each merchant. Explaining to consumers how BNPL works - at or before the checkout process - is critical as merchants partner with providers and roll out these services. ![]() Consumers appreciate the full disclosure of costs associated with their purchases. Transparency is a key to retaining customer loyalty and brand trust. The potential for increased conversion rates, coupled with possible higher average order value (AOV), make offering BNPL an attractive option for merchants. Further, 48% said Buy Now, Pay Later will allow them to spend at least 10% to 20% more than they would using a credit card, according to CNBC. A separate survey by PayPal and Netfluential indicates that consumers liked the convenience and consistent option of using Buy Now, Pay Later across merchants as well, as 28% of consumers ages 18-39 said they were more likely to shop at a merchant again that offered BNPL options. How Buy Now, Pay Later paves the way for deeper loyaltyĪccording to a Forrester and PayPal survey, younger consumers said the ability to borrow without interest for a period of time was the most important factor in choosing the BNPL option at checkout. This is a trend that will only continue to grow. According to PayPal’s Q3 2021 earnings release, approximately 950,000 merchants have customers who use our Buy Now, Pay Later capabilities, and 65,000 have positioned Buy Now, Pay Later upstream on their product pages. It is also important to message to shoppers earlier in the journey –– not just at checkout. consumers who used a BNPL service were more likely to report income volatility than those who used credit cards, leveraging BNPL can potentially help consumers avoid interest charges, and improve cash flow while paying over time.ĭuring times of greater financial duress, the flexibility of payment associated with BNPL is especially attractive to merchants, who seek to offer more customer-friendly solutions. While a study by Morning Consult showed that U.S. This checkout trend leverages flexibility and convenience for the consumer while promising greater loyalty for merchants in the long term.īroadly speaking, BNPL provides consumers with the ability to manage their spending while softening the impact of larger purchases. alone, the BNPL market is expected to grow 41.7% on an annual basis, reaching over $126 million in 2021. A new option, Buy Now, Pay Later (BNPL) has really taken off in recent years. ![]() How can consumers and merchants navigate this new normal, in a way that benefits both parties? Payments innovation is the place to look. It’s no wonder more consumers have indicated that they are more anxious about certain personal financial challenges. consumers had their employment affected by COVID-19. Beyond pandemic-related health concerns, according to PwC, over 78% of consumers said they have been economically affected by the crisis, and 38% of U.S. This extended period of economic uncertainty has brought about changes to workplace environments and everyday consumption, as well as economic fallout across geography. With the steady increase in the use of digital wallets, other non-bank fintech applications, and associated innovations within digital payments, consumers are experiencing a rapidly evolving checkout experience, changes in ways they can use credit, and how they track and manage their spending. The acceleration of e-commerce adoption has also changed the dynamic between consumer and merchant. While this has been partly born out of necessity due to safety and health concerns, it is also a reflection of the ongoing digital transformation that began even before the pandemic. From touch-free payments to delivery and pick-up alternatives, consumers are embracing new products and services and new ways to make purchases. This is the first of two articles by Unconventional Ventures in partnership with PayPal.Ĭonsumer behavior changed dramatically during the pandemic. The Future of Payments is Here: How Buy Now, Pay Later Can Add Value for Both Consumers and Merchantsīy Theodora Lau and Bradley Leimer of Unconventional Ventures
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