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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: Buy Now, Pay Later: Sales or Cost Driver?
Potential Pitfalls for Merchants Offering BNPL:
- BNPL lenders charge merchants for a basic four-installment plan that is interest-free for consumers.
- The merchant fees range from 1.5%- 6% of purchase price, which could be higher than a credit/debit card transaction.
- Converting lower-cost card sales to higher-cost BNPL sales is a cost driver, not a sales driver.
- Another possible BNPL pitfall for merchants relates to the customer experience.
- If the consumer does not have a good experience, a merchant’s brand image and goodwill may get bruised.
- A poor customer experience can be driven by the BNPL purchase or repayment process or encounters with other service-related issues.
About Viewpoint
A confluence of factors in our COVID economy have come together to make Buy Now, Pay Later (BNPL) installment options attractive for consumers. Merchants, of course, are drawn to anything that resonates with shoppers and has the potential to provide a competitive advantage and corresponding sales lift. The challenge for merchants lies in selecting the right BNPL partner that fits well with their products, technology, and shopper demographic while implementing BNPL in a way that drives new sales rather than simply increasing the cost of sales.