If you’re running an e-commerce operation, you probably know what it feels like when a customer adds items to their cart, clicks to checkout, and then… nothing.
Marketers call this cart abandonment, and there are many reasons why it happens. In some cases, it’s because the final number at the bottom of the screen is more than they planned on spending.
Shopping cart abandonment is not something you should just shrug away and say “maybe next time”. According to MasterCard, it’s a serious issue that costs e-commerce businesses a staggering $18 billion in sales revenue every year. That’s a big loss that should not be allowed to continue.
So, what can you do about it? One strategy e-commerce operators are using to defeat cart abandonment is offering shoppers the option to buy now, pay later (BNPL). However, before you start implementing, it’s important to consider the risks, especially around security and verifying customers.
Let’s discuss.
How Exactly Does BNPL Work?
BNPL is pretty simple. Customers come to your online store and shop like normal. When they get to the checkout page, they can choose to either pay for everything immediately or split the payment into installments. They can break the payments into two to six installments spread over weeks or months.
Here’s the best part: the BNPL provider pays you the full amount (minus a small fee) right up front. They take on the risk of collecting the rest from the customer.
What’s more? E-commerce platforms like Shopify, BigCommerce, and WooCommerce have plugins that make it easy to install BNPL into their checkouts. This means that you can add this feature to your existing e-commerce platform without any problems.
And you won’t be the only one, too. Buy now, pay later has become so popular that transactions are expected to hit $450 billion by 2026.
Benefits of Offering BNPL to Your Customers
Now, let’s talk about why you should consider integrating BNPL into your e-commerce checkout. What are the upsides?
Increases Sales: Not many people can afford to buy expensive stuff and pay in full. So, they stay away. BNPL takes away this purchasing barrier. Buy now, pay later appeals a lot to Gen Z shoppers, with records showing that up to 47% used it in the past year. That’s massive.
Increases Average Order Value: If you make it easy for shoppers to spread their payment over multiple installments, you’ll find that they’ll be willing to buy more. This means more gross revenue per transaction for you.
Improves Customer Experience: When people know they can shop responsibly without stretching their budget, and get great service while at it, they’re more likely to return. The result? Improved customer loyalty.
Risks and Challenges of Buy Now, Pay Later
BNPL is a great way to give your e-commerce operation the competitive edge, but it’s not without its downside.
Fraud is probably the biggest risk of the buy now, pay later strategy. BNPL sign-up processes are intentionally designed to be quick and frictionless. Unfortunately, this means that it can be targeted by fraudsters using stolen or fake account details.
While it’s true that your BNPL provider will bear the full brunt of any fraudulent transaction, you’ll still be on the hook for the cost of lost shipping and more. This is where identity verification and KYC checks come in.
BNPL providers typically perform KYC (Know Your Customer) checks to make sure the person making the purchase is who they say they are. They verify basic personal details, run digital ID and face checks, and sometimes do light credit or risk assessments.
One of the key companies setting the pace in this area is AU10TIX. The story of AU10TIX is simple, yet inspiring. They developed the next-gen identity verification platform, which speeds up verification, strengthens fraud detection, and makes onboarding smoother for businesses.
Best Practices for Implementing BNPL
So, now you know the upside and downsides. If you’re still interested in implementing BNPL, how do you make the most of it? Here’s what to know:
Pick the Right Partner
While it’s okay to look at fees (after all, you have to make a profit), don’t choose a BNPL provider just because the fees are low. Look for one with solid fraud protection and clear terms. Find out how they screen customers and the safety measures they use. A good provider should be open about how they keep both you and your customers safe.
Make BNPL Easy to Find on Mobile
Over 80% of shoppers browse on their phones, so your BNPL should be easy to find on mobile devices. If it’s not, then people won’t notice it, and that defeats the purpose. The trick is to test your product pages and checkout on a few devices. Make sure the BNPL option is easy to spot and simple to tap.
Monitor Your Metrics
Keep an eye on your numbers. You want to know what the average order value is and what repeat purchases look like. More importantly, you want to know about any fraud alerts. If you notice a sudden rise in chargebacks or suspicious orders in a certain category, look into it right away.
Add ID Checks for Risky Orders
When someone places a high-value order, or they’re shopping with you for the first time, adding a quick ID check can save you a lot of headaches. It’s a small step, but it stops most fraud attempts before they happen.
Ready to Transform Your Checkout Experience?
Buy now, pay later can be a powerful tool for your e-commerce operation. It’s a proven way to boost sales, increase order value, and meet customer expectations. But success requires the right information, and hopefully this guide has provided just that.
So, what are you waiting for? Why not start exploring BNPL options so that you can give your customers the payment flexibility they deserve?