Buy now pay later

Buy now, pay later (BNPL) credit products are rising in popularity around the world, as they are easy to use and allow consumers to pay for more expensive items in instalments of up to six months. As a retailer, having a BNPL offering can help you attract more customers and make more sales. Here’s a closer look at how BNPL works, and how Electrum can help you get up and running fast. 

More and more consumers are making use of buy now, pay later as it allows them to get the goods that they need immediately, with a little extra time to pay them off. By March 2021, more than half of Americans said they had used a BNPL service, and almost two-thirds said their BNPL use had grown since the start of the pandemic. In South Africa, BNPL transactions are expected to reach almost R4 billion by the end of this year.

BNPL has largely taken off in the e-commerce space locally. However, as consumer awareness grows, there is a big opportunity for brick and mortar retailers to provide this service as an alternative payment method (APM).

How does BNPL work?

While every provider has different terms and conditions, buy now, pay later can typically be thought of as a ‘reverse lay-by’ scheme. Unlike traditional lay-bys, the goods can be taken home on the day of purchase, and often there is no interest attached to the monthly instalments.

When it comes to making a transaction, the user loads an app on their phone from their chosen provider and uses this to pay – either by entering a voucher pin or by scanning a QR code. The transaction fee is paid by the merchant, and ranges between 2.5% and 4%, which compares favourably with similar transaction fees that are incurred when accepting payment via debit or credit card.

More ways to pay = more sales

BNPL has an obvious appeal to consumers, but it can have major benefits for retailers too:

  • More customers: By providing a flexible way for people to pay, you’ll increase foot fall and retain existing customers
  • Higher-value sales: With the option to spread payments over a few months, more people will be able to purchase more expensive products, like fridges and TVs. This will help you drive more lucrative sales.

So, while you will still have to pay a transaction fee to accept BNPL payments, your return on investment will be higher with a greater number of customers spending more in your store.

Get ahead of the curve with more innovative ways to pay

Introducing BNPL as an alternative way to pay doesn’t have to be a headache. By working with a technology partner that has existing solutions, you can set up the offering to suit your needs as a retailer, and get it to market fast.

  • Integrate new solutions with your existing platform: Easily connect with a BNPL provider of your choice and accept payments through the Electrum platform without having to be dependent on legacy card payment infrastructure.
  • Offer a reliable payment experience to your customers: Electrum’s switching platform provides full transaction integrity that your business and customers can trust.
  • Provide a service that works for you: BNPL payments can be made via QR or by entering a voucher code. Because we’re able to integrate our existing QR and single-use voucher (SUV) services with BNPL payments for apps, vouchers and voucher and pin authentication, you have more choice in how your offering works.

If you’d like to learn more about how Electrum can help you provide innovative ways to pay, please get in touch with us!

Werner Pyke

Werner Pyke

Werner is Electrum's Head of Product. He has extensive experience in both the African emerging market and the US Community Banking market. Having worked for a variety of companies over the last 16 years – from FinTech startups to multinational corporations, he’s become an expert in enterprise B2B product management.