Are you a business owner in South Africa who wants to keep up with the ever-changing payment landscape? Then you might be interested in learning about Buy Now Pay Later (BNPL) – one of the fastest-growing payment solutions in the country.
As the name suggests, BNPL allows customers to purchase goods and services upfront and pay for them later in instalments, often with zero or low-interest rates. This payment option has gained popularity in recent years, especially among younger generations who prioritise convenience and affordability.
But BNPL is not a new concept in South Africa. In fact, it has been around for quite some time, starting with traditional lay-by systems and evolving into the digital age with online platforms like PayJustNow and Payflex.
So why is BNPL becoming the go-to payment solution for many South Africans? Join us in this blog as we explore the reasons behind its rise and how it can benefit your business.
Breaking Down the Business Magic of Buy Now Pay Later
The basic concept of BNPL is simple. Customers can purchase goods or services and choose to pay for them in instalments over a set period, usually with little or no interest. This allows customers to spread the cost of their purchase, making it more affordable and accessible.
However, the real magic of BNPL lies in the business model behind it. Third-party providers, such as Payflex, facilitate BNPL transactions by partnering with businesses to offer the service to their customers. These providers pay the business upfront for the purchase, taking on the risk of the customer defaulting on their payments.
In return, third-party providers charge a small fee to the business for using their BNPL service. This fee can vary but is usually a percentage of the total purchase amount. The provider also charges interest and late fees to the customer if they fail to make their payments on time.
So what are the advantages of Buy Now Pay Later?
Firstly, it can increase sales and customer loyalty. By offering a flexible and convenient payment option, businesses can attract new customers and retain existing ones. BNPL can also improve cash flow by allowing businesses to receive payment upfront. Thus, taking on less risk than traditional credit providers.
Additionally, BNPL can reduce the administrative burden of managing credit accounts and chasing late payments. This allows businesses to focus on what they do best – providing quality goods and services to their customers.
The business model of BNPL is a win-win for both businesses and consumers. By partnering with third-party providers, businesses can offer a flexible payment option that can increase sales and improve cash flow. Meanwhile, consumers can enjoy the convenience of spreading the cost of their purchases while minimising interest charges and fees.
The Explosive Growth of Buy Now Pay Later in South Africa
Buy Now Pay Later has taken South Africa by storm, experiencing explosive growth in recent years. BNPL payments are expected to grow by 22% in 2023 alone.
The explosive growth of BNPL in South Africa can be attributed to several key factors. Firstly, the government’s support for fintech innovation has paved the way for the development and adoption of BNPL services.
Secondly, there has been a significant increase in the country’s working-age population, resulting in a more significant number of financially independent consumers who are actively seeking flexible payment options.
Lastly, the younger generations, particularly Gen Z and Millennials, are showing a growing preference for interest-free extra credit line sources like BNPL due to their convenience and flexibility.
In addition to these trends, the statistics surrounding BNPL in South Africa are staggering. The volume of transactions between 2022 and 2027 is expected to have a compound annual growth rate (CAGR) of 26%.
Find Your Perfect Match: How to Choose the Ultimate Buy Now Pay Later Provider
Choosing the right Buy Now Pay Later provider can seem overwhelming. However, by doing a bit of research and comparison shopping, you can find the perfect BNPL site to suit your needs. Firstly, it’s essential to understand the different types of BNPL sites available. They range from general-purpose providers to those specialising in specific industries.
Once you have a good understanding of the different options, it’s time to compare the benefits of each provider, such as interest rates, fees, and payment terms.
If you’re looking for a BNPL provider that ticks all the right boxes – have a look at Payflex. Our Buy Now Pay Later service offers a flexible payment solution for customers to shop today and pay later. The cost of the purchase is split into four interest-free and fee-free payments, with the first 25% paid upfront and the remainder spread over three instalments in six weeks.
This free spending plan can increase sales by up to 30%. What’s more? Payflex pays merchants upfront in full, less a commission, and takes care of collecting payments from the customer over the instalment plan. The risk of non-payment is on Payflex. It’s that simple.
The Future of Buy Now Pay Later in South Africa
The future of Buy Now Pay Later in South Africa looks promising, with the trend expected to continue growing as more merchants and consumers adopt the payment solution. BNPL is predicted to evolve to cater to the changing needs and demands of the market, such as offering longer payment plans and integrating with other digital payment options.
With Payflex, merchants can stay ahead of the curve by offering customers a flexible and convenient payment solution that can increase sales by up to 30%. If you’re a store owner looking to enhance your customer’s shopping experience while boosting sales, consider Payflex as your preferred BNPL provider.
Sign up now and start enjoying the benefits of Payflex today.
