How can e-commerce SMEs use “Buy now, pay later” ethically?

While major e-commerce brands have migrated to BNPL, small and medium businesses are more reluctant to adopt it…

“Buy now, pay later” (BNPL) continues to grow in popularity, with the Banque de France estimating that this payment method represents around €4.5 billion a year and this figure could grow by 40% by 2023. the acceleration of online shopping at the time of the pandemic and the search for good deals for consumers method. So why this hesitation? What assumptions? And how can SMEs deploy BNPL while clearly communicating the associated risks?

A subtle balance between higher performance and ethics

With the rise of BNPL, merchants must strike a good balance between the risk this new payment facility brings to the consumer and an improvement in sales conversion rates. Thus, and regulation is still expected to evolve in this regard soon, the BNPL brings with it the risk of over-indebtedness for certain misinformed consumers. As such, commercial establishments must provide transparent, reassuring and fully explicit information to the consumer about the conditions of use of the BNPL and the associated risks.

Of course, BNPL also has many advantages: for consumers, a certain flexibility for those who do not always have immediate resources to buy at the moment of the transaction, for merchants, this flexibility allows to increase conversion rates and the average value of purchases. BNPL is also generally interest and fee-free when payments are made on time, so if handled properly it shouldn’t cost the buyer extra.

An increasingly competitive market

Interest in BNPL is now stronger among tech players. Thus, Apple announced the launch of Apple Pay Later during WWDC 2022. This new service will allow Apple Pay customers to make online purchases split into four payments over six weeks. In addition, PayPal wants to expand its long-term payment options with a more flexible service, PayPal Pay Monthly: instead of having to pay for their purchases in a six-week period as before, consumers can spread the total cost across payments. monthly for a period of 6 to 24 months. These new services offered by tech giants will challenge locally historical players like Oney or Floa, but also pure players like Klarna and the promising French fintech Alma, which has raised 115 million euros this year.

Among this rich offer, the challenge for retailers will be to choose the service that makes the most sense and creates the most value for their consumers.

surveillance point

The regulation, already in place, provides for transparent disclosure of fees, amounts owed and credit reports, giving consumers a general idea of ​​what they are getting into – all of which represent a move towards greater protection.

When a customer is about to place an order online, it is important to clearly explain the different payment methods offered and display the terms and conditions in a conspicuous manner. It’s a simple way to help consumers manage their money and decide if they can meet their payment schedule. Setting up push notifications before payments to inform customers of upcoming payments, for example, is a simple and effective measure. Offering the BNPL means acting in an even more responsible and supervised manner.

Consumer wallets are under great pressure these days, with inflation forecast to hit 4.4% in 2022, according to AFP. The French are looking for payment methods that give them financial flexibility and allow them to use their purchasing power as they see fit. BNPL perfectly responds to this need and also allows companies to increase their turnover and market share, provided that they do so with respect for the customer and with complete transparency.

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