Popularity of E-commerce
The global pandemic has considerably accelerated the shift towards e-commerce. The explosion in online shopping has come out of requisite. The social distancing and shielding necessities are limiting people’s ability to shop in-store. It is thus safe to say the trend of online buying is not going anywhere. Customers and businesses grew more comfortable with online shopping. They also drove the acceptance of new payment methods for the advantage of businesses and shoppers alike.
With more businesses accepting e-commerce as part of their shopping routines, online payment tactics have turned out to be more significant than ever. How merchants process, accept, manage, and reconcile payments, particularly on a global scale, directly impacts revenue and conversions.
One payment method as per the businessmen that is experiencing tremendous growth in customer adoption is known as Buy Now Pay Later Credit. This option enables businesses to get payments for goods and services in instalments from customers over time, frequently without interest.
Paying in instalments is not a new practice; but, recent financial technology has assisted in developing a risk algorithm that is making the method more advantageous for merchants. At the same time, Millennials and Gen Z are demanding choices for payments. The present economic climate is expanding the audience for instalment plans to Gen X and Baby Boomer shoppers who may have been not at ease with the idea. From the perspective of customers, they have the ability to buy something now rather than having to save up for it.
While increasingly customers and even B2B customers are searching for ‘buy now pay later, merchants must carefully think about the benefits and risks of implementing this option prior to adding it to their online stores.
Benefits of Buy Now Pay Later (BNPL)
- User-friendliness: A few BNPL platforms sustain a QR-code option where you can scan the code to carry out a payment, but others enable you to carry out BNPL transactions through UPI.
- Immediate access to credit: You do not have to look for alternative credit options. With BNPL, you are provided instant credit at the point of sale itself, making for a frictionless and smooth purchase.
- Safety and security: BNPL helps businesses to receive payments from customers without swiping their card and PIN, keying in their net banking details, or transferring money from an e-wallet. An OTP is sent to their registered mobile phone, which is required.
Apart from the flexibility and convenience offered by BNPL, this credit option can also assist to build a favourable credit profile as long as they sustain the end of the agreement with the lender or merchant and make your repayments on time.
Tips to use BNPL option in a better manner
Listed below are the steps to help you use the BNPL option in a better manner:
- The flexibility provided by BNPL repayment terms and tenures is a vital draw. Now, there can be charges applicable, based on the tenure you select. If the repayment period you have chosen is an interest-free one, you will not have to pay anything. Make sure you make your repayments before the due date, or you may be charged late fees.
- You can make a range of BNPL transactions with various lenders or merchants, but keep in mind a tab on the total amount spent. You know your credit obligations, financial stand, and other dues, so blunder on the side of caution and monitor your BNPL transactions. Even if it is within your approved credit limit, overspending can make it hard for you to repay your dues dutifully.
- It is essential to practice financial discipline when making your repayments, just because a missed payment will entice a late fee, and this can impact your credit profile. Make sure you pay your BNPL amounts due by the given date to reap the benefits of a loyal consumer. You can also set calendar reminders and alerts to stay associated with your dues and make timely payments before they accrue interest.
BNPL is undoubtedly an appealing proposition for customers. It is essential to avoid getting carried away. Maintain credit and financial discipline to maximize this credit option to your benefit.