How Payment Orchestration Enables Retailers to Maximize the Value of Buy Now Pay Later

Consumers are tempted by payment options that offer them more or less convenience and flexibility. This year, they have more choice than ever as digital wallets, online cash apps, QR code payments, money transfers and cryptocurrencies become mainstream.

An increasingly popular form of payment around the world is Buy Now Pay Later (BNPL). This payment option allows consumers to pay for their purchases over time rather than in advance, and often without interest or fees. It’s no surprise that consumers like the BNPL because they can immediately purchase goods on terms that are more manageable to them financially.

Retailers are equally enthusiastic about BNPL. In fact, these point-of-sale loans can generate a 20-30% conversion rate and increase average ticket sales by 30-50%. Additionally, BNPL allows retailers to expand payment choice at checkout, making it easier for them to attract new customers and increase their bottom line.

Let’s look at some key considerations for retailers interested in BNPL services and look at some of the technology solutions available to help facilitate this journey.

Provides payment option at checkout

Retailers need to be able to offer the flexible and alternative payment methods that consumers are looking for in order to maximize conversion at checkout – why?

Consumer cart abandonment is widespread with an average rate of 69.82%. The inability to offer consumers the checkout payment methods they demand can easily lead them to look elsewhere. Offering BNPL services to meet customers’ desire for flexible payment options is crucial for customers looking for more options at checkout.

BNPL services allow customers to purchase goods in advance and repay the cost in more manageable installments. These benefits can increase customer satisfaction and loyalty, which often results in additional sales, higher purchase frequency, and higher average purchases.

Boosts customer acquisition

BNPL is proving to be a boon for consumers, with the payment method seeing 215% year-over-year growth in the first two months of 2021. Consumers are also using it to place orders 18% more important. Indeed, Deloitte expects around 11% of all e-commerce purchases in Europe to be processed through BNPL by 2025.

For retailers, BNPL means incremental growth, allowing them to secure additional sales and additional consumers with the simple convenience of being able to pay in instalments.

Additionally, BNPL enables retailers to more effectively target lucrative demographics such as Gen Z and Millennials. The percentage of Gen Z using BNPL in the US, for example, increased by 24% between 2020 and 2021; while use of the BNPL by millennials increased by 13%. Older consumers are starting to see the appeal as adoption of BNPL by Baby Boomers and Gen Xers increased by 10% between 2020 and 2021.

Facilitate deployment and management of BNPL

However, the reality is that new payment methods such as BNPL present both an opportunity and a challenge for retailers. While it is beneficial to give customers a choice of how they can pay for a product or service, it can be laborious to negotiate with multiple payment service providers and expensive to accommodate their different APIs and features. . In fact, it can take several months of painstaking integration work to add a single payment type to an existing payment stack and associated payment, fulfillment, and accounting systems. Then there’s the back-end work required to support updates and improvements to a payment type throughout its lifecycle.

So, for all its consumer appeal and potential financial benefits, many retailers are discouraged by the complexity of implementing BNPL and unsure how to onboard, integrate, scale, and manage the service over the long term. This is where payment orchestration and a cloud-native payment orchestration platform (POP) can help.

Retailers are increasingly replacing their legacy payment infrastructure and systems with POPs. Why? Because POPs make it easy to route and process payments between multiple payment providers and unify all components of a transaction under a single layer of control, enabling end-to-end management and automation of payment processing. In other words, a POP allows retailers to streamline and manage all of their payment methods, services and transactions in one place while eliminating the time-consuming and costly coding and integration work involved in onboarding and support for different payment methods.

Another advantage of a POP is that it allows retailers to work with a variety of payment providers and thus avoid being locked into proprietary APIs or a single ecosystem. The result? More payment options at checkout, which helps maximize customer conversion and increase sales.

There are many excellent payment service providers and payment orchestration platforms in the market today. However, retailers should carefully weigh the pros and cons of each service and platform and ideally choose a POP that offers the advancements of cloud computing and can easily integrate new payment methods.

With new forms of payment emerging almost daily, it is important that consumers have access to the payment options they want and demand. Increased checkout options, such as BNPL, benefit retailers and customers. The right payment orchestration platform can allow a merchant to quickly get up and running with BNPL and enjoy all of its benefits without having to manage another type of payment.


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Elaine R. Knight