5 Reasons You Should Offer Buy Now, Pay Later Options On Your Ecommerce Site

Financing Insights | 5 mins

Not all payment options are created equal. Putting a big purchase on a credit card might seem convenient, but your customers are warier than ever about how to pay off their shopping expenses without incurring unexpected costs. Offering a “buy now, pay later” option at checkout is more than just a nice-to-have—it’s becoming an essential, expected part of the shopping journey. This is doubly true for your growing Millennial customer base.

With buy now, pay later on the rise, you’re probably wondering whether it’s something you should offer in your online store. Here are five reasons to start offering buy now, pay later on your ecommerce site.

1. Younger Consumers Prefer Buy Now, Pay Later

Buy now, pay later solutions of all types are rapidly growing in popularity—and it’s younger consumers that are driving this trend. Younger generations are less likely to trust traditional financial institutions in general, but they still need convenient ways to pay over time. Buy now, pay later options act as a modern version of layaway, giving young shoppers the freedom to pay over time without a credit card. More big-name brands are offering these payment methods, meaning they’re becoming something that customers expect everywhere.

2. Shoppers are Ditching Their Credit Cards for Buy Now, Pay Later Options

Credit cards remain a popular transaction method, but relying on them as the primary payment method for your business is only a good idea if all of your customers actually have one. The number of credit cardholders in your target audience might be far lower than you expect.

Millennials are wary of carrying a large credit card balance. Many consumers are trying to avoid revolving debt that these payment methods can enable. Millennials are notoriously averse to credit and debt, with one study finding that Millennials carry two fewer credit cards and private label cards on average than their Gen X counterparts. In fact, only 33% of Millennials actually have a credit card, and many prefer to use their debit cards for regular transactions. Buy now, pay later is a great alternative for those who don’t have access to a line of credit, or don’t want to rely on it exclusively.

3. Buy Now, Pay Later Increases Sales

Because buy now, pay later options address your customers’ pain points at checkout, they can help drive up sales and order values. PayPal found that average order values for retailers increased by 15% once they started to offer financing, and Bread has seen AOV increase by more than 30% with buy now, pay later.

30% of shoppers using buy now, pay later options said they wouldn’t have made the purchase at all had it not been for the six-month financing that was offered to them. Buy now, pay later options can also result in a 17% increase in incremental sales. Plus, our own data shows that consumer financing triples average order values.

4. Buy Now, Pay Later Can Improve Your User Experience

76% of U.S. consumers are more likely to make a retail purchase if offered a payment plan backed by a simple and seamless point of sale experience. Consumers today expect clear and simple ways to pay, whether they’re in-store or online—and buy now, pay later options are a viable alternative to traditional methods.

A seamless, full-funnel, and white-labeled buy now, pay later solution can take the friction out of the buying process by putting all the information customers need about financing in front of them at or before checkout. Bread delivers a seamless, cohesive experience that matches your brand’s so that customers can easily make their way to checkout with financing.

5. Buy Now, Pay Later Is More Affordable for Your Customers

As we’ve already seen, customers are looking to avoid debt and extra fees. When customers have to make a big purchase, the last thing they have to worry about is paying even more in interest. In fact, Bread found that 73% of shoppers have experienced significant stress about how to pay interest for a big-ticket item. That’s why buy now, pay later options are especially effective when coupled with 0% interest rates. 85% of shoppers are interested in their favorite retailers offering interest-free buy now, pay later options. And while financing increases convenience for your shoppers, there’s no “gotcha” moment for the consumer or the retailer.

On the consumer side, Bread doesn’t offer deferred interest—unlike other financing providers. This is when a financing provider charges a high accrued interest rate to customers who don’t pay back their full balance during an interest-free introductory period. This can lead to revolving balances, high APRs, and poor customer experience.

On the merchant side, minus a small fee, you’ll receive the total payment for any orders upfront, despite the fact that customers are making monthly payments. Additionally, Bread shoulders the risk associated with repayment.

Is Buy Now, Pay Later Right for You?

As you consider which payment methods to add to your ecommerce site, think about your customers. If you’re able to offer them more choice, more convenience, and greater affordability, they’ll associate these benefits with your brand. The same is true for a rocky, high-friction, or inconvenient experience. Align your payment options with your values—especially if you have a younger audience. If you want to deliver the kind of cutting-edge experience that will meet their expectations, then buy now, pay later options are your best bet.