"Buy Now Pay Later" For Small Businesses

Are you a small business owner struggling to attract customers who can't afford your goods upfront? Are you losing sales to competitors who offer more flexible payment options? Are you looking to create an inclusive buying experience?

The "Buy Now Pay Later" payment solution could be what you are looking for.

BNPL payments

How does "Buy Now Pay Later" work?
For the uninitiated, “Buy Now Pay Later”, or BNPL, is a type of short-term financing solution. Customers are able to make purchases upfront while paying their dues across several interest-free installments. This makes BNPL increasingly popular among businesses and customers these days.

The rise of “Buy Now Pay Later”
Over the past few years, the BNPL payment model has exploded in popularity.

According to YouGov, 43% of Singaporeans have used a BNPL service, with 57% stating that they are more likely to shop with a retailer that offers this option. This trend is not unique to Singapore, as BNPL usage has also increased in other countries such as the UK and Australia.

The phenomenal rise is due, in part, to the convenience and flexibility it offers to customers who may not have the immediate financial means to purchase items outright. In addition, the growth of e-commerce and online shopping has made it easier for customers to access and use BNPL services. The pandemic, too, has fueled the demand for BNPL services.

Given the rising cost of living, experts believe that the demand for BNPL services will only increase in Singapore. Furthermore, the success of multiple BNPL services, including ShopBack PayLater, in Singapore has helped to raise awareness of this payment model and increase its adoption.

Should “Buy Now Pay Later” be adopted by small businesses?
There are several compelling reasons why starting small businesses should adopt the BNPL model. Here are what we know:

1. Attract more customers
Offering BNPL as a payment option can help small businesses attract more customers, particularly those who may not have the funds to pay for purchases upfront. Furthermore, by providing a more flexible payment option, small businesses can also differentiate themselves from competitors and gain a competitive advantage.

2. Improve cash flow
BNPL services typically pay the small businesses upfront for the purchases. This can, in turn, help improve cash flow and reduce the risk of non-payment or late payments. For example, with ShopBack PayLater, merchants will always get paid in full and upfront as ShopBack assumes the credit and fraud risk, hence allowing merchants to transact with ease.

3. Build trust and credibility
BNPL services often come with built-in fraud protection and dispute resolution processes, which can help small businesses build trust and credibility with their customers. By offering a secure and reliable payment option, small businesses can build credibility and professionalism.

4. Increase average order value
BNPL services can encourage customers to make larger purchases than they would otherwise. For example, a newlywed couple with tight finances can afford bringing home a brand new, wide-screen TV by splitting their payment into monthly installments using BNPL. By spreading the cost of a purchase over time, rather than having to pay for it all upfront, customers can shop responsibly with a peace of mind.

In addition, research has shown that merchants who adopt this payment mode achieve a 68% higher average order value. In other words, BNPL is a financing solution capable of triggering customers’ desire to buy the things they need.

5. Reduce cart abandonment
Many customers abandon their online shopping carts when they see the total cost of their purchase, including shipping and taxes. BNPL services can help reduce cart abandonment by breaking up the total cost into smaller, more manageable payments. This can help small businesses capture sales that might otherwise be lost due to cart abandonment.

Partner with ShopBack

What to consider when choosing “Buy Now Pay Later”?
If you are looking to incorporate BNPL into your small business, consider these factors when making your decision

1. Fees and interest rates
BNPL services typically charge fees and interest rates for their services, which can vary depending on the provider. Small business owners should carefully review the terms and conditions of each BNPL service they are considering, and compare the fees and interest rates to other payment options, such as credit cards or traditional loans.

2. Customer satisfaction
If BNPL services are attractive options for customers, it makes sense to then step into their shoes and envision which provider they prefer using. Conduct a market survey on the existing BNPL providers in town, download their mobile applications to ascertain ease of use, as well as check out the merchants on board.

3. Integration with existing systems
Small business owners should consider how easy it will be to integrate BNPL services into their existing payment systems and platforms. They should evaluate whether their current systems can support BNPL services, or if they will need to invest in additional technology to support the new payment option.

Diversify your payment options with ShopBack
If you are looking to offer a BNPL payment option to your customers, ShopBack is here to help. Regardless if you’re an online or offline retailer, you’ll be able to reach millions of high-intent shoppers via our suite of Marketing, Payments and Rewards tools.

Merchants who are interested to offer ShopBack PayLater may sign up here.