The Buy Now, Pay Later (BNPL) trend is rapidly changing the retail landscape and creating significant benefits for shoppers. As a payment method, it’s been seen to greatly increase affordability, choice, and convenience for shoppers – both online and offline.
With the right strategies in place, the future of BNPL promises to offer even more opportunities for retailers looking to grow their customer base.
In this article, we explore what lies ahead for Buy Now, Pay Later platforms in retail.
1. Buy Now, Pay Later: Solutions Embraced in the E-commerce Industry
The rise of Buy Now, Pay Later (BNPL) solutions in retail has been rapid and transformational over the recent past. For shoppers, this payment model offers a host of advantages, from increased affordability and choice to greater convenience when shopping online or offline.
It has had an especially profound impact on the e-commerce industry. BNPL companies are increasingly popping up as third parties or intermediaries to link retailers with consumers, providing these solutions to online shoppers via mobile apps and web-based APIs.
To remain competitive, more and more retailers are accepting BNPL payments from providers such as Klarna, Sezzle, Afterpay, and Affirm, just to name a few. E-commerce platforms like Shopify and Amazon even have their own BNPLs– Shop Pay Installments and Amazon Pay Later respectively! For example, users shopping online for Pokémon Cards could choose to Buy now and pay later in up to 4 installments.
2. Recent Developments in BNPL Regulations & Efforts to Protect Consumers
The emergence of BNPL solutions has prompted financial regulators globally to reassess consumer protection standards. This is pegged on the fact that increased access to these payment options could increase the risk of consumer over-indebtedness.
To this end, several countries, such as the UK and Australia, have taken measures to protect consumers from risks associated with the use of Buy Now, Pay Later products.
According to a past publication by the UK Treasury, new FCA regulations are in motion to ensure providers follow responsible lending practices when offering credit access and repayment facilities to shoppers.
3. New Technologies That are Enhancing the Benefits of BNPL Retailing
The rise of Buy Now, Pay Later solutions has also prompted the development and increased use of innovative technologies aimed at making it easier for retailers to accept and manage these payment solutions. And as anyone would guess, artificial intelligence (AI) and machine learning (ML), are among the latest technologies gaining traction in the BNPL industry.
If we consider emerging technologies, the impact of machine learning and Artificial Intelligence (AI) on the retail industry is all the rage right now. To say the least, these technologies can be used to recognize customer preferences, increase affordability options during checkout, and make more intuitive product recommendations.
They can also be used to increase transaction efficiencies, throughout the shoppers’ journey, from credit scoring to payment processing. As a result, retailers can provide customers with more attractive BNPL options.
4. Integration of BNPL in Mobile Banking (and Online Banking) Apps
One of the key trends shaping the future of Buy Now, Pay Later solutions is their integration into mobile banking apps and online banking platforms. For example, the Sofi bank app already offers an option called “Pay in 4”, which allows eligible users the convenience of paying for big purchases in four affordable installments as long as they have a checking account.
With the BNPL feature added, shoppers can access shopping credit and a range of other payment options quickly, without having to switch between multiple interfaces or applications. This allows for reduced overall transaction costs overall, as well as improved convenience for both retail customers and businesses alike.
To sum it up, Buy Now, Pay Later in retail is here to stay– at least by the look of things. As new regulations emerge to protect shoppers, and innovative technologies enhance their benefits for retailers, this payment solution stands ready to revolutionize the retail industry. The future of BNPL looks bright indeed!