‘Buy now, pay later’ (BNPL) is becoming more and more popular by the day. In fact, one in five (20%) of British consumers admitted to using BNPL to finance their Christmas shopping.

As a retailer, you might be thinking it seems somewhat counter-intuitive to take payments in monthly instalments. However, there are some ways that offering BNPL can benefit YOU as well as your customers.

Read on to find out more.

What is ‘Buy now, pay later’?

Buy Now, Pay Later (BNPL) is a type of short-term financing that allows customers to make purchases and pay for them at a later date. These payments tend to be made in weekly or monthly instalments, and they are often interest-free.

How does BNPL work?

As we covered off in the last point, BNPL arrangements are essentially instalment loans made at the point of purchase to allow customers to spread their payments over a longer period of time.

In most cases, the customer will make one upfront payment towards their purchase before paying off the remainder of the balance in an agreed number of instalments. Payment plans are often interest-free and easier to get approved for.

There are several BNPL providers available, and all of them work slightly differently. But usually, you (the retailer) will receive payment upfront. The finance provider will deal with collecting the payments whilst charging a percentage fee of the purchase amount.

What are the benefits?

From your customers’ perspective, the ability to split payments up into smaller, more manageable chunks is always a bonus - especially when making a big purchase.

It also means that your customers are more likely to spend more. In fact, it’s been proven that BNPL has helped increase the average order spend for many retailers.

And best of all? You’ll be paid upfront and in full, leaving the payment provider to take the credit risk.

Where can I get started?

Search online for BNPL providers. Some of the bigger players include Klarna and ClearPay, but there are other ones too. Once you’ve made your decision, you’ll probably have to fill out a form on their website before you can start offering the payment option to your customers.