In the last three years, BNPL has become the term used to describe anything falling under the consumer financing umbrella.
As merchants and ecommerce businesses try to leverage the varied BNPL options available to their consumers, it is important that they understand that Buy Now Pay Later is far more than a split pay option. BNPL is a necessity that will help online stores maintain and expand their customer base in the coming years.
The Modern-day Shopper & Buy Now Pay Later solutions
In 2000, PayPal Credit, formerly BillMeLater, sparked the online point-of-sale economy. If a merchant decided to accept PayPal Credit, then this gave online shoppers another way to pay. Today, the modern-day consumer is now met with a medley of BNPL options at the checkout.
Just as its name suggest, Buy Now Pay Later lenders allow consumers to apply for financing, and pay for the item in equal installments. According to the Consumer Finance Protection Bureau, the BNPL industry saw high-speed growth during the Covid-19 Pandemic. From 2019 to 2021, “BNPL loans grew by 970%, from 16.8 to 180 million, while the dollar volume of these originations (commonly referred to as Gross Merchandise Volume or GMV) grew by 1,092%, from $2 billion to 24.2 billion.”
Most retail businesses, especially e-tailers, recognize the importance of presenting their consumers with this type of financing option. They know that BNPL is here to stay, but the companies who invest in BNPL payment technologies will be the ones that thrive.
The Problem with Too Many BNPL Options
If five people were asked to describe their credit persona, none of them would have the same answer. Yet time and time again, merchants tend to treat their consumers like they are in the same financial position. If a consumer were to hop onto an online store selling electric bikes or PC gaming computers, they might see popular options, like Affirm, Klarna or Bread. However, one lender cannot underwrite every customer.
Presenting multiple lenders at the checkout poses challenges as well. The average consumer does not know the difference between one BNPL option from another. And many consumers have different BNPL needs and preferences. For instance, millennial and Gen Z consumers have different buying behaviors than Gen X and Baby Boomers. Per PYMTS.com (1), Boomers are less likely to use a BNPL option, whereas GenZ is the most likely. Gen Z likes BNPL, because their credit limits are lower. Younger generations may only have one credit card, which is why BNPL is attractive to them.
The Right Payment Technology Matters
Merchants with more than two financing options at the checkout are more likely to lose a customer to cart abandonment. More applications mean more keystrokes, which can lead to confusion and eventually, the customer leaving the webstore altogether. According to PYMNTS.com, 73% of customers will never return to a webstore if they had a poor checkout experience.
Investing in the right payment technology can help merchants manage their need for multiple BNPL options, while also maintaining a high-quality checkout experience for their customer. GenZ and Millennial consumers want an easy & fast checkout with multiple options presented to them. Multiple lender platforms, like WeGetFinancing, allow customers to see multiple Buy Now Pay Later options, side by side, for which they are already approved.
How Multi-lender Platforms Are The Future of BNPL
2023 was a tough year for many Americans, and 2024 will most likely bring similar challenges to the American consumer. More consumers will live paycheck to paycheck, credit scores will fall from prime levels and more consumers will move with fiscal caution. Merchants can no longer rely on one BNPL lending partner to manage all their financing sales.
The American consumer needs to know, more than ever, that they can buy from their preferred merchants. WeGetFinancing is a multi-lender platform with a one application and multiple lenders, accommodating sales from $200 to 15K. This type of payment technology will lead consumers to what they value most, multiple BNPL options.
According to PYMNTS.com, 60% of consumers will leave your website if their preferred payment method is not available. WeGetFinancing presents customers with a variety of BNPL options (installment loans, revolvers, leases, etc.…) all in one place. Gone are the days of single lender solutions, waterfalls with long checkouts, multiple credit checks, multiple applications, multiple buttons, and consumers feeling backed into a corner by people who do not bother to understand their unique financial situation.
