Buy Now, Pay Later – A Solution That Solves The Problem of Abandoned Carts

The main goal of any e-commerce project is to make a profit. Without it, even the most interesting and promising startups quickly cease to exist. It’s easy to lose customers at any stage of the sales funnel. One of the important difficulties on the path to high project conversion is abandoned carts.

In this article, you will learn about a solution that allows you to make the desired purchases anytime and retain potential buyers. We also recommend using the Rates fm service to improve your experience with currency when making purchases.

The Main Reasons for Abandoned Carts

Cart abandonment occurs when customers add an item to their cart but do not order it.

Statistics show that on average, only 1/3 of the items added to the Abandoned carts are purchased (⅕ for mobile devices). In other words, only one cart out of three is redeemed in full, and the remaining two (four out of five for mobile devices) remain forgotten.

According to numerous studies, the share of abandoned carts in online stores varies from 56% to 81%, depending on the category, and on average is about 70%, and for mobile device users, it is even more than 80%. Working to reduce cart abandonment rates can help e-commerce grow sales.

The main reasons for users abandoning carts:

1. Appearance of additional costs (delivery, commissions, etc.)
2. The need to register on the site.
3. Lengthy ordering process.
4. Slow delivery.
5. No understanding of the total amount of the order.

Also, one of the stopping factors when making large purchases is the need to spend a large amount of money at once. Customers have doubts and as a result, often refuse to complete the order.

One of the most popular methods of increasing purchase conversion is optimizing check-out, which is the process of paying for goods. Working on it, according to experts from the Baymard Institute, can increase conversion by an average of 36%.

The Buy Now, Pay Later Trend As a Tool For Increasing Conversion

One of the fastest-growing trends in recent years to increase conversion in marketplaces and online stores is the use of BNPL solutions.

BNPL (buy now, pay later) services allow users to pay for goods in installments, without concluding agreements with banks.

This payment method is beneficial for both the buyer and the seller:

• The buyer quickly proceeds to pay. He does not draw up loan agreements, does not fill out long forms in the online store, and does not pay commissions. All that is usually required of him is to fill out a short questionnaire and make payments on time. He receives the goods immediately. Using the service is as easy as purchasing an Aetna insurance policy or other regular services.
• The seller receives the entire amount at once, and not in parts. At the same time, for the store, this is an opportunity to increase the average check and conversion into purchases, as well as attract a new audience who previously only asked for the price or kept goods in the online store Abandoned carts until better times. Sellers pay a commission for using the service.

The popularity of BNPL, according to Mokka’s research, is due to the age of the main e-commerce audience in the US – Generation Z (18–25 years old) and millennials (26–35 years old). The study found that the majority of these consumer groups do not use Visa or Mastercard credit cards.

Thus, the use of such payment services allows retailers to meet the interests of these generations.

This is far from the only advantage of BNPL for the consumer; let’s consider other strengths:

• no overpayments or hidden fees for using the service;
• the ability to buy and use the product immediately, and pay in equal amounts later
• the ability to independently choose a payment schedule and, accordingly, the amount of payment.
• no need for credit history, collateral, guarantors, or documents confirming solvency;
• fast ordering

How Does BNPL Work?

BNPL is built into the checkout and allows users to pay for the purchase in installments according to a convenient schedule, dividing the cost over 1 to 10 months:

1. Payment is divided into different periods; the client can always choose a payment period that is convenient for him.
2. Money is provided for a specific online purchase. You will not be able to receive them in cash or spend them otherwise.
3. All actions are carried out quickly and remotely. There is no need to visit the organization’s office, sign paper contracts, or present income documents.
4. Even citizens without a credit history can take advantage of the offer. Just like requests from everyone else, their applications are processed within a couple of seconds.
5. Users cannot make purchases using this system in offline stores.

Benefits of Using BNPL For Business

Marketplaces have been driving online commerce for several years now. In addition to the development of large and well-known platforms, entrepreneurs are investing in the creation of new niche marketplaces. For example, the creation of marketplaces is relevant in the field of construction and renovation.

Products for construction and renovation often have a high cost and payment in installments, with the help of BNPL services will help marketplaces successfully close a larger number of transactions.

The key advantage of using this model for business owners in any niche will be the opportunity to increase the average check and, as a result, monthly profit. Statistics show that potential buyers are more willing to make a purchase if they have the option of paying in installments.

Another advantage of using BNPL for business is expanding the client audience. Buyers will also be those who, for various reasons, cannot and do not want to purchase goods, paying the full price at once.

It is expected that in the future, BNPL services will allow users to make purchases using cryptocurrencies, such as Bitcoin, Ethereum, or Binance Coin from the Binance crypto exchange.

Final Thoughts

Millennials and Zoomers are the main users of the BNPL system. Compared to credit cards and installment plans, this payment method is more technologically advanced, faster, and more modern. This attracts the younger generation: you can buy an iPhone or an online course with post-payment, without looking up from your smartphone and social networks. For more profitable handling of money, we recommend using the Rates service. Which allows you to track currency exchange rates in Ukrainian financial institutions. The service is available at any time of the day, wherever you are – in Toronto, Los Angeles, or Paris.