The Future Of Credit With ‘Buy Now, Pay Later’ Payment Method

Almost everyone can remember having piggy banks to collect money so that in the end, that money could be invested to purchase what one wished for. With time this trend of collecting money has changed. Today, people believe in the uncertainty of life so they thrive to fulfil their wishes ASAP. Many SaaS companies found various ways to harness this desire of customers to uplift their own businesses.

The buy now pay later (BNPL) business model is one of the ways to cater to all those customers who cannot pay the upfront purchase price of the product or the services that you are offering. Also, the convenience that this business model offers to both buy now pay later companies and the buyers will make it the leading business model in the future.

SaaS companies also opt for payment gateways to ensure the security of online payments. You can also get installment payments with Stripe and SubscriptionFlow offers integration of its subscription management system with Stripe to ensure transaction security. In this article, you will find the facts indicating that buy now pay later is a futuristic business model and how you can get your installments paid through Stripe payment gateway.

Also Read: Top Payment Gateways For Recurring Payments In Europe In 2021-2022

Increase in the Buying Power of the Customer

The BNPL business model is a way to boost the buying power of those customers who are incapable of paying the upfront cost of any product or service. So, these customers are offered to pay the cost in installments and get the services or products immediately. For instance, a tour to Greece is always enjoyable in the early days of the summer season when one can bask in the sun and enjoy the dark blue sparkling water of the Aegean Sea and Mediterranean Sea. So, travel companies can get a chance to offer book now, pay later because for many people a tour to Greece is not worth it after the summer season.

These packages help bring diverse customers on board and expand businesses. Offering installment for the product and services that customers need immediately is more like offering wings to the customers and boosting the purchasing power of customers that ultimately improves the performance of your business.

Also Read: Building the Customer Success For Different Subscription Businesses & Finding Factors That Help In Retaining It

Expansion of Online Retail Space

Subscriptions and Installments have become the leading cause of the expansion of the online retail space. How? Covid-19 was a horrific episode for all businesses across the globe. However, many businesses turned this challenge into an opportunity and started finding new avenues to run their same businesses. Covid-19 that shut people in their homes and snatched employment from many affected the purchasing power of the customers.

Now that vaccines were introduced and the world was expecting to get out of the crisis in the near future, customers also got hope. And different businesses started offering installments for their product and services so that the customers get what they want and pay as per their feasibility. Thereby, Covid-19 has a significant role in introducing the BNPL business model for the business community that was previously operating without this business model.

That’s how more and more retailers entered the market and the online retail space expanded. If you compare the pre-pandemic retail space with the post-pandemic one, you will see businesses from varying domains have entered the market to harness the potential of the BNPL business model.

Also Read: Increase Revenue Manifold For Buy Now Pay Later Business With SubscriptionFlow

Interest-Free Buying

There are two types of installments divided based on the time duration. i.e. short-term installments and long-term installments.  The short-term installments that do not last for more than six months are usually kept interest-free. And it is one of many reasons for the success of the shop now pay later business model. Customers find it feasible that they need not pay even a penny more than the purchase price of the product they are buying plus they can pay in chunks.

eCommerce is a huge business market and many of the eCommerce stores now offer to buy now pay later options to their customers. The BNPL got the rapt attention of millennials and Gen Z shopper because of the following reasons:

  • Payment divided into 4 installments
  • Interest-free buying
  • A budget-friendly option

However, with the outbreak of the pandemic, all that retailers need to retain their customer base was to make their terms and condition to pay installments more flexible and customer-friendly.

Some Business Industries That Are Successfully Running on the BNPL Business Model

The buy now pay later is not a new concept rather many industries cannot think to thrive without this business model. It is just that Covid-19 affected the buying power of the customers badly and many businesses that once could not even think of running on installments started shifting to offering installments to their customers so as to improve the purchasing power of the customers.

One of the largest business industries operating on the buy now pay later business model is the real estate industry. Often the cost of constructing a property e.g. resorts, summer houses, and villas is so much that not even millionaires are not ready to invest their money to purchase these properties. So they offer installments to the interested parties. Sometimes banks are involved in offering installments and memberships for such real estate properties. Today, installment buying has a huge share in the real estate business market.

Just like real estate, many organizations offer education loans which is another form of installments. In 2020, a total amount of 95.9 billion dollars was given as education loans in the US. The amount of money given to students as loans was at its peak in 2010 when 135.1 US dollars were given as education loans. The cause of the decline in the number of student loans in 2021 is covid-19 as well. However, it is an established industry that can run its business in a far better way through a subscription management platform. Because the core of installments and subscriptions is the same. Both involve the payment of charges in chunks rather than a hefty upfront purchase price.

Not just the businesses but people are paying charities and donations in installments. The reason for offering the BNPL option for non-profit donations is again the buying power and affordability of donors. Many charity programs need immediate donations and donate now pay later is a win-win for both donors and the charity organizations.

If you are offering shop now pay later option to your customers, then you can run your setup in a far better way by adopting a subscription management software. Because these software are specially designed and developed to manage billing and payment for recurring charges. And installments are another name for the recurring charges. The only difference between the recurring billing business model and the installments is that of ownership. After paying installments, the customer becomes the owner of the product. However, in the case of recurring charges, the customer gets his need fulfilled but he does not own the product or service.

Also Read: How The Payment Landscape Evolved For Subscription Businesses In 2021 And What To Expect In The Future

If your customers pay in instalments for your products and you want these installments to be managed through an automated platform, then adopt SubscriptionFlow. Through this platform, you can collect recurring payments with Stripe because it offers integration with Stripe payment gateway. You can also consult with SubscriptionFlow experts, all your business-related worries. It is suggested by experts that now is the best time to adopt a subscription management system so that your BNPL business setup will be prepared to welcome the future that belongs to this business model.