How does buy now pay later work and how can it help you reduce cart abandonment?
December 16, 2022
Buy Now Pay Later solutions are integrated with online payments and allow customers to pay for products in installments. While the financial terms may vary by company, each allows consumers to get what they want immediately and pay for it over time.
In some cases, installments can be a money-saving alternative to using a credit card, which on average charges an annual interest rate of 17.14%.
Although credit card companies and their banking partners now offer similar payment options, buy-now-pay-later firms often tout their perceived advantages over credit card late fees, penalties and compound interest.
Importantly, buy now and pay later options can reduce abandoned cart rates.
Last year shoppers left more than $34 billion in their carts online or nearly 7% of all digital commerce that year. If retailers offer additional financing options, or so the thinking goes, conversion rates will improve.
The option to buy now and pay later is increasingly attracting customers at lower prices and can now be used to finance less expensive items such as clothing, sneakers, cosmetics and even something as basic as school supplies.