Apple Enters Buy Now Pay Later. Should Your Business Care?

Guess who’s coming to your customer’s virtual wallet? Apple Pay Later. And if the name alone didn’t give the story away, the tech giant is entering the point-of-sale, short-term financing market by offering installment loans on everyday purchases for consumers. Full details are still to come, but this offering increases the list of options for consumers wanting to spread out payments over the short term and for businesses willing to let them. 

So, how will this impact small business? By and large, Buy Now Pay Later, aka BNPL, has been a boon for consumer spending. Of course, according to stats from Pymnts.com, if you’re a local business not yet offering Buy Now Pay Later, you may be a little late to the party (fortunately, there’s no end-time) — 55% of your local competition already offers BNPL online, although only 5% of local businesses offer it for in-person transactions. Why? Good question, although CNBC notes that Buy Now Pay Later has the potential to: 

• Increase spend per transaction 30-50%
• Boost conversion rates 20-30%
• Improve customer loyalty

Of course, this also means that 45% of local businesses aren’t offering BNPL. If you’re one of them but considering adding a new way for your customers to pay, we did some of the research for you. 

• What is Buy Now Pay Later? Think of BNPL as a new spin on old-school layaway but in this version, the customer gets the goods up front with an option to pay — (usually) interest free — over a set number of installments. Businesses can offer Buy Now Pay Later to customers either online or in-person. 
• Why do consumers use BNPL? Buy Now Pay Later is (usually) offered free-of-charge and without interest to the consumer, and approval is fast and easy, all of which can make a purchase — big or small — seem easier to swallow. Just like credit cards, merchants cover the cost of the service, which NerdWallet currently estimates to be between 1.5% and 7% of the total purchase price. 
• Do your customers use Buy Now Pay Later? A full year and a half ago, 55.8% of consumers were already sold (excuse the pun) on BNPL. Want more specifics? BNPL has also been adopted by all generations of shoppers, although according to Paypal, Millennials (49%) have been fastest on the uptake followed by Gen X (33%), Gen Z (18%), and Baby Boomers (11%). This chart from C+R Research dives deeper into the what and why behind the service’s popularity, including 56% of respondents who prefer BNPL to credit cards.

Isn’t BNPL just for retail? No. Businesses across industries (think dentists, attorneys, plumbers, etc.) already offer BNPL. The service is popping up in restaurants and other establishments, too. Anywhere there’s money to spend, you’ll probably find a consumer who doesn’t want to use a credit card but also doesn’t want to part with cash. Buy Now Pay Later is a good compromise.

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