Best Buy Now Pay Later For Shopify

Buy Now, Pay Later has grown exponentially over the last three years, and it shows no sign of slowing down. Buy Now, Pay Later (or BNPL) is no longer a luxury afforded only for big ticket items or through large established merchants, instead accessible to 90% businesses – dropshipping and print on demand included. Buy now pay later for Shopify is now common place, and will be expected by your customers as a standard feature of online shopping.

With so many merchants offering what appears to be the same service, we’ve collated the best of the best to breakdown who offers the best Buy Now Pay Later for Shopify integration?

What is Buy Now Pay Later?

Buy Now, Pay Later (BNPL) is an alternative financing option that allows consumers to purchase everyday items now but pay the balance over time. BNPL is something the average Joe has been using for years – think mortgage, or car finance – but that has found its way into the mainstream for lower value items.

By offering a buy now pay later option as a brand owner, you give your customers the flexibility to pay for their order over time but you get the luxury of receiving the payment upfront, in full.

Why You Should Use Buy Now Pay Later for Shopify

Pricing is one of the major obstacles customers encounter during purchasing. Removing that obstacle by facilitating the customer to pay in smaller chunks can make your businesses or product all the more appealing. For you, this means:

  1. Increased conversion rates: If your customers’ only option is to pay outright in order to buy from your store, this could lead to price shock and thus, a dreaded abandoned cart. Offering a BNPL option simplest the purchasing decision for the customer and can increase conversion rates by up to 30%.
  2. 🛒 Cart abandonment: A BNPL solution minimises the ‘risk’ or ‘guilt’ of paying big amounts, and thus reduces cart abandonment because customers feel more comfortable with their purchasing decisions.
  3. 💰Increase in average order value: When you allow customers to complete big purchases in small installments, this makes them more confident in buying higher priced items from you.

Which is the best Buy Now Pay Later for Shopify?

1. Sezzle

Sezzle is an upcoming solution that allows customers to pay for their order in four monthly instalments. They don’t look at a customer’s credit score, but instead look only at a bank statement.

This can potentially open up your products to an even bigger audience, whilst still being more responsible than traditional loans. The risk is removed removed from the business, as Sezzle pays you on behalf of the customer, removing any potential disruptions to cashflow. Sezzle then collects the monthly payments from your customers. There is no sign up or set fees, the platform simply take a set percentage and processing fee from each order.

2. Klarna

Klarna is one of the most well-known Buy Now Pay Later solutions on the market. It boasts a network of over 90 million global shoppers, meaning it’s a familiar name that can expand your viable customer base.

Similar to Sezzle, it allows customers to split their payment over multiple payments, and it addition it lets you offer customers the option to make a delayed full payment i.e. in 30 days. And like Sezzle, Klarna takes responsibility for taking the repayments for a customer.

Best for: 🧑🏿‍🤝‍🧑🏻 Customer Recognition

3. Affirm

Affirm market themselves as a solution that removes price as a barrier, turning browsers into buyers, increasing average order value, and expanding customer base. On average, Affirm customers see an 85% lift in average order value and a 20% repeat purchase rate. Those numbers are substantial.

When customers checkout, Affirm will offer a range of monthly payments and will display an Adaptive Checkout. This checkout will suggest a time-period that increases the chance of customers committing with you based on their order history.

One area to be conscious of with Affirm interest rate. It charges customers with an interest rate ranging from 0% ARR to 30% ARR. This is less buy now pay later, and more pay day loan territory.

4. Zip

Zip is another well-known Buy Now Pay Later solution. In its most popular plan, it allows your customers to pay for items up-to $1000 in four installments, interest free. However, a $1 verification fee is charged in each installment.

Payments made via Zip by your customers are transferred to your bank account on a daily basis, and there is no minimum transaction limit. To process your payments, Zip simply charges a small fee on each transaction, which decreases based on how many transactions take place on your website.

Zip is a rather small fish in comparison to the others listed here, but it’s up and coming and the daily payment schedule can be attractive to those in dropshipping or print on demand where cashflow is king.

5. Afterpay

Afterpay is a solution that gathered momentum in Australia, partnering with Beginning Boutique and catapulting itself into the 18-24 female market. Afterpay allows customers to pay for the purchases in a bi-weekly fashion and monetises by charging late fees.

While attractive for the customer, for retailers, there is a $0.30 + 4-6% merchant fee on all transactions, which can prove hefty depending on product value and profit margins on your site. If the math adds up, payments are instant following customer approval on Afterpay, so it’s a nice addition to have to any store.

The Bottom Line

Buy now pay later for Shopify will be an important integration for any retailer in 2022. Whether you agree or disagree, buy now, pay later solutions are everywhere in modern society – if you don’t offer them, someone else most likely will. Customers now expect to be given the option of how to manage their purchases, and are significantly more likely both to check out, and to return, if given the option to spread the cost.

While upcomers such Affirm and Zip are ones to watch in the coming year, when it comes to finance, customers need recognisable names. Start with Klarna or Afterpay in 2022, and re-evaluate when the competitors are more well established.

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