BNPL (Buy Now, Pay Later) is the term used to describe the offer of credit to customers to buy products or services. It used to be offered only by larger merchants. Now, a new generation of BNPL service providers are bringing BNPL to small- and medium-size businesses, too.
How BNPL works
Merchants can run their own BNPL service in-house. These days, however, even larger merchants tend to prefer to partner with a BNPL service, such as Afterpay. These provide a straightforward and convenient route to running a legal and effective service.
With a BNPL service, simply integrate the service with your existing website payment page or real-world tills. If you are using Square with Afterpay, this is already done for you. The customer is then offered BNPL as part of the standard payment options.
If they accept, they usually pay a deposit. They then sign an agreement to pay the balance in four interest-free instalments.
With Afterpay, you get full payment for the goods upfront. This means that, from a cash-flow perspective, offering BNPL is essentially the same as accepting credit cards. Yet from a business perspective, BNPL offers several advantages over credit cards.
Offer buy now pay later with Square x Afterpay
Attract new shoppers and drive incremental revenue. Businesses using Square Online can now offer Buy Now Pay Later as a payment option through Square and Afterpay integration.
Why your business should offer BNPL
Customers who have access to credit have greater freedom to buy what they want or need at any given time, whereas customers without access to credit may have to postpone or abandon purchases. For example, they may choose to lease instead of buy. Alternatively, they may opt for a lower-grade product or service or just ‘make do’ with what they have.
At a minimum, offering BNPL allows you to expand your reach among customers who don’t have credit cards. This may be simply because they do not want them. It can also increase your reach among people who do have credit cards.
This is because BNPL services tend to be interest-free. If the customer opts for a longer payment term, interest is likely to be charged. Even so, it still typically costs a lot less than using a credit card for the purchase. This explains why BNPL has become so popular with customers.
BNPL in figures
Consider the following impressive BNPL figures:
In 2020, Canada’s adoption of BNPL payments grew faster than the United States, with a jump of 30% in just one year, and the payment method is expected to grow over 63% in 2022.
Using BNPL increased basket conversion for as much as 30% of merchants.
Using BNPL increased average basket value by as much as 50%. Average orders increase by 85% when BNPL is an offered payment method.
How to promote BNPL to your customers
Signing up with a BNPL service is a great start. The next step is to make sure that your customers know that you offer it. You may also need to educate some customers on what BNPL is.
Online website messaging
Ideally, mention your BNPL offering on every page of your website. This means your customers are guaranteed to learn that you offer it. They can also click to find out more about it if they need to. At a minimum, have information about BNPL on your homepage, special landing pages, product pages, on your checkout page, and in your FAQ section.
If you use a chatbot, make sure it can explain BNPL to any customers who don’t know about it. Likewise, if you employ staff for human chat, make sure they’re aware that you’ve added the option to your website.
Social media messaging and promotion
Incorporate your BNPL offering into your standard social media messaging. Adjust the level of prominence according to the content. For example, if you produce educational content, mention your BNPL service in the comments. You could also tag Afterpay so that people can visit their profile if they wish.
If you’re producing more promotional- or sales-driven content, highlight your BNPL option. This makes it immediately obvious to potential customers that there’s an easy and convenient way to pay for your products or services.
Thanks to PIPEDA, your email marketing list should only contain customers who have actively opted in to receive marketing emails. This means these people are likely to be highly engaged with your company.
Learning that you are now offering BNPL is likely to be very exciting news for them. Make it even more exciting by introducing it with a special promotion.
Once you’ve made the initial announcement, keep up the momentum by mentioning your BNPL offer regularly. Again, adjust the level of prominence to suit your overall message. This reminds existing customers of the service and ensures that new ones get to hear about it.
Train your staff to mention BNPL whenever they think it’s appropriate. At a minimum, have them remind customers it’s available if they’re going to make a bigger-ticket purchase. If you work with influencers, or just have relationships with them, ask them to mention it too. Encourage your most loyal customers to mention it to their friends. Maybe offer an incentive for doing so.
Square customers now have the added flexibility of Afterpay. Afterpay is now integrated with all Square eCommerce products, including Square Online, Square Online Checkout, Square Invoices, and Virtual Terminal.