The Impact of Buy Now, Pay Later (BNPL) on E-commerce

Buy now, pay later" (BNPL) is a payment model that has revolutionised the world of e-commerce. It allows consumers to buy a product or service now and pay for it later, usually at no extra cost. It facilitates optimum management of their cash flow and encourages them to buy a product that might otherwise be out of their daily budget. 

By 2022, more than 360 million people worldwide were using BNPL.

Easy to use, consumers can choose to pay for their purchases in instalments thanks to the flexibility of the payment service.

How does BNPL work?

Buy now, pay later works very simply.

Consumers choose the product or service they want to buy online. When the basket is validated, the Buy now, pay later option appears as the payment method. Consumers proceed with payment by entering their bank details in the same way as for a conventional purchase. They will not be debited until a later date (usually 30 to 90 days, depending on the BNPL option).

The BNPL process works in the same way as a conventional transaction, except that the consumer is not debited immediately as in a conventional purchase.

On the seller's side, payment for the transaction is made directly by the payment service provider or operator offering BNPL.

This method allows consumers to consider larger purchases that they would not make with a traditional purchase. BNPL helps to increase the average basket on the platform.

Increased consumer loyalty and conversions

This payment method helps to increase the average shopping basket, since it offers flexibility in terms of consumers' purchasing power. Thanks to this solution, consumers can consider purchasing a good or service that they would not have been able to do at the time. The customer experience is optimised, because BNPL encourages consumer loyalty and therefore sales, by offering more attractive payment methods.

Consumers will favour one platform over another in order to obtain flexibility on their payment methods.

It has been found that platforms with BNPL have an average additional conversion rate of +2.1% compared with those without this option.

Challenges and prospects

Despite its many advantages, BNPL is not without its challenges. Security and the fight against fraud are major issues for BNPL players. It is crucial to guarantee the security of transactions and prevent any misuse of the system. It is also important to ensure that consumers fully understand the terms and conditions of BNPL and do not find themselves in financial difficulty.

The economic impact of BNPL on consumers

BNPL has a significant economic impact. By facilitating transactions and increasing consumers' purchasing power, it stimulates consumption and therefore the economy. In addition, BNPL can help to mitigate the effects of recession by enabling consumers to continue buying even in times of financial difficulty. However, it is important to note that this means of payment must be used responsibly to avoid over-indebtedness.

BNPL also has an impact on the consumer's social environment by enabling them to manage their cash more efficiently and reduce financial stress. It can contribute to financial inclusion by offering an accessible payment option to those who do not have access to traditional forms of credit.

Obvy, an all-in-one transactional solution

Obvy was the first in France to launch payment in instalments between private individuals from summer 2020. This innovation, created in collaboration with FLOA, enables buyers to spread their payment over time while guaranteeing sellers that they will be paid in full, in a single instalment.

Obvy API brings together all the services needed to manage all types of transaction, end-to-end and effortlessly. By natively integrating payment, delivery and dozens of other features, Obvy API gives you everything you need in a single solution.

With all the most advanced features, you increase your ability to acquire, convert and retain customers by offering a complete transactional experience that gives you the ability to compete with the biggest companies on the market.