If you’re a South African eCommerce merchant, you’re more than likely to have heard the term “BNPL”. BNPL stands for Buy Now Pay Later and, in South Africa, it’s making waves as an alternative payment plan for savvy shoppers.
But, what does BNPL mean for eCommerce merchants like you? Buy Now Pay Later might be a crowd-pleaser for the consumer market, but you need to know the implications for you if you choose to offer this payment option to your customers.
Payflex is here to answer all your questions about how Buy Now Pay Later works in South Africa. We are, after all, the first and biggest BNPL service on the African continent. We’d say that puts us in a prime position to explain how our services work in a local context! Let’s get right to it.
How does Buy Now Pay Later work in South Africa?
Generally, BNPL is offered as a payment option (along with credit or debit card and instant EFT payments) on an eCommerce website. When a consumer selects BNPL as a payment plan, they receive their goods immediately. But, they only have to pay for them later. Generally, consumers have to pay a fraction (e.g. 25%) of the total cost upfront. The remaining amount is split into equal, interest-free instalments to be settled over a number of weeks.
BNPL might sound and feel like a new concept in the South African market, but that’s not strictly true. For years, South Africans have used layby payment plans to secure their goods and pay for them in interest-free instalments. So, what makes BNPL different from a layby?
The primary difference is that, with BNPL, the consumer can take their goods home immediately. They don’t have to wait until the final instalment is paid before they can take their purchases home. However, neither layby nor BNPL payment options charge interest to the consumer. That’s a consumer benefit that they share!
Is Buy Now Pay Later big in South Africa?
The short answer is, yes! And it’s only getting bigger. BNPL has exploded in a market bursting with mobile-savvy South African shoppers who prefer to buy anything from clothes to home furnishings without incurring high interest rates. Let’s look at some stats, shall we?
An April 2022 report by Research and Markets shows that Buy Now Pay Later payments in South Africa are expected to grow by 97.5% annually. Total payments are set to reach a whopping USD 457.3 million by the end of this year alone. This local BNPL growth is on par with global trends.
For example, Ventureburn points out that BNPL is enjoying a positive growth rate of 10-15% per month. Between the first and second quarter of 2o22, BNPL recorded a 50% upwards spike in users. In fact, Worldplay predicts that BNPL will be the world’s fastest-growing payment method by 2025.
So, why is Buy Now Pay Later on the rise in South Africa? There are a few answers to that question. One theory is that the growth of BNPL is due in part to the rising cost of living and the increasing preference demonstrated by mobile millennials and Gen Zs for eCommerce-based payment methods.
Ultimately, there are plenty of reasons why BNPL is on the up in South Africa. It’s good for the consumer, that much is clear. But what does BNPL have in store for eCommerce merchants?
So, what’s in it for eCommerce merchants like me?
Good question! As Christopher Ball, founder of financial solutions developer Finch Technologies put it, ” Merchants are far more likely to make a sale and their conversion rate is far higher when using online BNPL platforms. Consumers generally buy more because they receive the product upfront and have the ability to pay it back interest-free over a period.”
In fact, according to RBC Capital Markets, offering your customers a BNPL plan can increase conversions by 20-30%. Other merchant benefits to BNPL (as outlined in this RMB article) include an increase in average order value and volume and decreased customer acquisition costs as shoppers are being herded to the merchant from the BNPL app or site.
Furthermore, BNPL is a closed-loop payment system that offers refined data insights into customer trends. This can be invaluable information for making the most of your ROI. All of the benefits of BNPL are available to merchants for a nominal fee. This is usually calculated according to the volume of sales that your store makes, much like many other payment solutions.
Payflex: the leading Buy Now Pay Later platform in South Africa for eCommerce merchants
It’s clear from the stats and reports that BNPL is here to stay. So, join the revolution and offer your shoppers a flexible payment plan and see your sales and average order value skyrocket! But why, you might ask, should you choose Payflex?
We’re in the partnership business, so we’re not looking to trap you in long-term contracts that don’t serve you. We’ll absorb 100% of the risk of consumers defaulting on payments, and we’ll pay you within the next business day. No funny business, just positive cash flow, increased conversion rates and total order values, and very happy customers.
Plus, we’ll throw in some goodies like business funding opportunities and free marketing to our thousands of customers. Listen to us gabbing away – you could read all about it for yourself by browsing our Merchant FAQs or our Merchant Home Page. Or you could sign up right away. You’ve got nothing to lose, and so much to gain!