It seems too good to be true right? You’re shopping online, eyeing a pair of sneakers that cost quite a lot more than you’d like to spend right now. You’re about to click off the page, when you notice a sign that says: “Get it now, pay later”. Seriously? This is music to anyone’s ears!
If you fancy yourself among a growing legion of savvy online shoppers, it is highly likely you would’ve noticed Buy Now Pay Later (BNPL) being increasingly offered by eCommerce merchants as an alternative way to pay at checkout.
The payment platform has experienced a rapid rise in popularity as more shoppers ditch credit cards. And growth in the sector isn’t set to slow down anytime soon.
A new report by Worldpay from FIS forecasts that BNPL services will steadily gain eCommerce market share ultimately earning nearly 3% of global eCommerce spend by 2023. Similarly, a recent report from IBISWorld predicts the BNPL industry will grow by 9.8% annually over the next five years to $1.1 billion.
But, what exactly is BNPL, how does it work, and what is all the fuss about? We examine the growing global payments movement in further detail.
Buy now pay later defined
BNPL is exactly what it sounds like: A payment platform that allows shoppers to buy what they want now and pay later by splitting the payment for their purchases across a set time period.
What makes BNPL different from credit is that the consumer isn’t charged any interest or fees. Shoppers who choose this option at checkout receive the product right away but pay for it in interest-free installments. It’s essentially similar to the old school concept of layby, but you get the product upfront.
There are a number of key global players leading the buy now pay later industry including Afterpay, Klarna and Zip Pay, which has a 25% stake in South African BNPL payment fintech, Payflex. Payflex is the first truly free payment plan in South Africa.
How does Payflex work?
It’s pretty simple and easy to get signed up. Best thing about it? There’s no detailed application process.
To apply, simply select Payflex as your payment method at checkout, provide your ID number, and we’ll assess you in seconds. The system works in real time. Meaning, if everything checks out, you’ll be good to shop in less than a minute. Your goods are then shipped immediately and your payment is spread across 4 equal interest-free fortnightly payments over 6-weeks. Note: Shoppers need to be over 18 years of age or over.
Buy now pay later here to stay
2020 has certainly been BNPL’s year. The Coronavirus pandemic has been an unlikely catalyst for the sector’s growth with people’s shopping habits shifting dramatically. A growing number of consumers are now demanding alternate payment options, pushing BNPL into the mainstream.
Budget-conscious younger consumers, particularly millennials and Gen-Z, want flexible, interest-free payment options that don’t push them into unnecessary debt. This is especially relevant at a time when consumers are finding themselves under additional financial pressure due to the pandemic. In fact, a recent report by Global Web Index found 83% of consumers think brands should be providing flexibility in payment options.
Simply put, these younger shoppers want options for everything, including how they pay. This growing adoption of BNPL has led to a flurry of global interest in the platform by big financial services and technology has led to a string of high-profile acquisitions in the sector. In May, Chinese Tech Giant Tencent acquired a $250 Million Stake in Afterpay.
Buy now pay later is certainly becoming a force to be reckoned with in the global payments space.
Not only is it rapidly transforming the way we shop, it’s proof that consumers are approaching purchases with a completely different mindset.
And as changing consumer behaviour in response to the COVID-19 pandemic becomes more entrenched, more consumers will demand transparency, convenience and interest-free payment options. So, what are you waiting for? Get shopping today and discover the benefits of BNPL’s interest-free shopping offering.