In the ever-changing world of retail, the rise of Buy Now Pay Later is a big deal. But here’s something important to remember: BNPL solutions aren’t here to replace credit card processing.
Indeed, more than geopardizing your Credit Card sales, an advanced BNPL Gateway is here to complement them—and tap into a new market of consumers who may not use credit cards at all. So are your credit card sales at risk? Let’s explore why the answer is “no,” and how this shift can open up new opportunities for both consumers and retailers.
The Payment Solution Landscape: Credit Card Gateways, BNPL Checkouts, and Everything In Between
These days, payment solutions look a lot like a buffet, with a wide variety of options to choose from. Whether you’re selling in-store or through eCommerce, here’s a quick rundown of the current landscape:
- Cash: Now only used in 12% of in-store transactions in the U.S. 1. Slowly becoming a relic of the past, but still relevant for some in-person transactions.
- Credit Cards: The heavyweight of payments, allowing consumers to make flexible payments, often with rewards. Credit card gateways account for 62.6% of all retail purchases (eCommerce and in-store) 1.
- Debit Cards: Like credit card processing, but tied to your bank account—payments are immediate.
- Checks: Still around, mostly for business transactions or larger sums. Less relevant for eCommerce transactions.
- Mobile Payments & Digital Wallets: Apple Pay, Google Pay, and SensePass make it super easy to tap or click to pay.
- Buy Now Pay Later: A BNPL gateway like WeGetFinancing let consumers split payments into installments, making bigger purchases more manageable.
- Cryptocurrency: A niche player in the payment space, gaining traction in tech-forward markets.
- Bank Transfers: Mostly used for large (eCommerce) purchases or B2B transactions.
Each payment solution has its perks and caters to different needs. But with BNPL checkout making waves, the question is—will it start eating into credit card sales? Short answer: No. Let’s explore why.
Are Credit Card Gateways at Risk If You Offer Consumer Financing via Buy Now Pay Later?
Credit card processing is convenience at its finest. It offers a flexible line of credit, rewards, and near-universal acceptance. For many, using a credit card gateway is second nature. You swipe, tap, or click, and your purchase is done. Chances are, if you have a credit card, you’re probably using it.
But here’s the twist: not everyone has or wants a credit card. Some people don’t qualify due to financial reasons, while others simply prefer not to use them. That’s where a BNPL gateway come in.
Instead of relying on credit limits and compounding interest, BNPL solutions let consumers split payments into manageable installments. This makes purchases accessible to people who don’t have credit cards or prefer not to use them, opening up new avenues for sales.
Buyer Profiles: Who’s Using Credit Card Gateways vs. BNPL Gateways?
The types of buyers using each payment method differ significantly. This distinction is key to understanding why BNPL solutions and credit cards can coexist without stepping on each other’s toes.
Credit Card Gateway Users:
- Convenience Seekers: These are the people who value speed and ease. Credit card processing offers a familiar and seamless way to pay for goods.
- Reward Collectors: Credit card gateways often come with perks like cashback, points, or travel rewards. These benefits attract consumers who want to earn something extra with each purchase.
- Credit Builders: These are individuals looking to establish or improve their credit score. They use credit cards responsibly and pay bills on time to build a positive credit history.
BNPL Gateway and Consumer Financing Users
- Budget-Conscious Consumers: Many BNPL gateway users are cautious about spending and prefer breaking payments into smaller, more manageable chunks. It’s perfect for people who need to stick to a budget but still want to make larger purchases.
- Millennials and Gen Z: Younger generations, especially, are flocking to BNPL solutions. In the U.S., 34.6% of Millennials and 30.4% of Gen Zers prefer to use BNPL for regular purchases 22. They appreciate the flexibility and lower risk of compounding debt, which appeals to their financial values.
- Debt-Averse Shoppers: Some consumers simply don’t want to deal with compounding credit card interest, fees, or debt. BNPL’s “buy now pay later” model often feels less daunting and more transparent.
While credit card gateways and BNPL solutions serve different types of consumers, neither is really capable of replacing the other. Each payment gateway appeals to distinct buyer profiles with different preferences and needs.
Credit Card Gateways and Buy Now Pay Later: Different Value Propositions, But Increasingly Alike
Credit card processing has been around for decades, offering unmatched convenience and a broad range of perks. It is universally accepted, allowing for instant purchases, often with valuable rewards. Whether you’re buying a cup of coffee or booking a flight to Europe, a credit card is likely your go-to option.
But what’s also happening is that BNPL is evolving into just as convenient a payment option as credit cards. More and more BNPL solutions are integrating seamlessly into online checkout flows. Working with major retailers, a BNPL gateway can now provide the same instant gratification as a credit card. With its growing acceptance and ease of use, consumer financing is quickly becoming a go-to option for many consumers. It’s just as easy to use as a credit card gateway, but with the added benefit of financial control and transparency.
Think of it this way: credit cards are about flexibility and perks, while BNPL solutions are about control and predictability. Both offer different advantages, and together, they provide consumers with more options than ever before. For the consumer, it’s about which option feels right at the moment—and for retailers, it’s about offering that choice.
BNPL Checkouts: A New Avenue for Retailers and Payment Gateways
“Retailers who fail to embrace an advanced BNPL gateway risk losing out on sales from consumers who prefer this payment solution. And if you’re not offering Buy Now Pay Later, you’re limiting your potential to reach those consumers.”
So, what does all of this mean for retailers? Here’s the key takeaway: Credit card gateways aren’t at risk by offering consumer financing. In fact, offering BNPL solutions can actually help you increase your sales by tapping into a whole new customer base.
Think of it this way: If your store only accepts cash or credit cards, you’re limiting your potential. But if you also offer BNPL solutions, you’re opening up your business to a much larger pool of customers. Many shoppers who avoid credit cards are willing to pay if they can split payments over time. A BNPL gateway allows you to reach this audience without alienating your credit card customers. It’s not about replacing one payment gateway with another—it’s about offering your customers a choice.
Retailers who fail to embrace an advanced BNPL gateway risk losing out on sales from consumers who prefer this payment solution. And if you’re not offering Buy Now Pay Later, you’re limiting your potential to reach those consumers.
The Takeaway of Payment Gateways: Embrace the Future, Don’t Fear It
The bottom line is this: Buy Now Pay Later and credit card gateways aren’t enemies. They’re just two different tools in the payment toolbox, each offering something unique to the consumer. For retailers, the key is to provide as many options as possible. Offering both credit cards and BNPL solutions ensures that your business is accessible to a wide range of customers.
As more consumers turn to BNPL checkouts, retailers can access a growing market of underserved buyers. The future of payment solutions is about options, convenience, and accessibility. Embrace these changes, and your business will be ready to thrive in a world where customer choice reigns supreme.
For Best practices and incoming payment innovation, make sure to Register to our next live webinar “2025 Insights: Retail Payment Innovations You need Now”. We will host it at linkedin and streamyard, the 21st of January 2025 (2 PM CT). It’s totally free and we will take advantage of it to review more deeply these topics.
Notes
- Capitaloneshopping.com, Cash vs Credit Card Spending ↩︎
- Pymnts.com, New data Defining The New Buy Now Pay Later Consumer ↩︎
