By now, we, the consumers, must have used BNPL features in the shopping apps at least once by now.
BNPL, Buy Now Pay Later, is a short-term financing that allows consumers to make immediate purchases and pay for them at a future date. Most Pay Later options are interest-free because the main purpose of this PayLater feature is to increase purchase volume and allow for flexible payments to consumers.
In the B2C market, it is often referred to as short-term point-of-sale instalment loans. BNPL has been gaining popularity on shopping apps when consumers purchase everyday items such as smartphones, home furnishings, or even flights and hotels.
As with all financial institutions and Fintechs that offer digital business account options, INFT is also evolving fast to meet consumer and business needs. Suffice to say, by partnering with platforms, manufacturers, wholesalers, and distributors, we are helping business enable this repayment model too.
Suffice to say, Point-of-Sale (POS) financing services grew, not just in the United States but all over the world, because it was fueled by the onset of COVID-19, the sudden rise in digitization, the growth of merchant adoption, and the rapid increase in younger consumers on the internet.
Not only are the general consumers on the lookout for alternative financing methods, but so were businesses.
It is projected that by 2025, the Pay Later feature would have racked up $680 billion in total transactions worldwide. The recent economic fallout began pushing consumers and businesses towards digital financing, according to this report by eMarketer.
Some of the reasons by there was an upsurge in the use of the BNPL payment option include:
The situation is not so different for businesses, especially those with 10 or fewer employees that had been badly hit by the pandemic and economic slowdown. Not only millions of consumers were left unemployed and financially insecure, but small to medium companies endured years of lockdowns and closures which saw a drastic drop in sales.
They all need some form of aid or alternative payment method to help tide them through.
How BNPL works is that it helps businesses make purchases without applying for new loans, extending their current loans, or compromising the value of their assets. This modern layaway and instalment plan helps consumers and businesses utilise flexible payment options without using high-interest loans or credit cards, for everyday low-ticket items.
Assuming a restaurant is now ready to open its doors again after the lifting of its country’s lockdown, it may need a revamp of its interior, hire new employees, or replace faulty equipment. All of this needs a capital injection. With Buy Now Pay Later as an option, these small businesses can quickly put boots on the ground to get their businesses started again without having to forage through the traditional loans offered by banks and other financial institutions.
They can rely on direct BNPL service providers which are in the best position to provide them at the point of sale.
For the sake of comparison, facilitators such as Shopify, Paypal, Mastercard, and Stripe, just to name a few, have enough clout and a strong strategy to enable their merchant network to offer BNPL solutions to their customers.
At the point of writing this article, traditional banks are still reluctant to adopt this financial model. Thus, Fintech companies have taken the lead. According to McKinsey’s Consumer Lending Pools data, Fintech companies are diverting $8 billion to $10 billion of revenue away from traditional banks.
Fintech and merchant partnerships will continue to contribute toward BNPL growth by 60% in the next 12 months. According to ResearchGate, the Asian region is home to the largest generation of entrepreneurial youths in history. This is all thanks to the globalisation and digitalization era.
Case in point, more businesses and general consumers have more virtual VISA cards to make digital payments instead of using their traditional credit or debit cards. It is a change in consumer habits that will surely catapult ahead in the future.
POS BNPL merchant partnership and financing may still be a small part of the game for now, but it’s growing fast. SME sales financing has helped countless businesses, regardless of where they are and their financial situation, get back on their feet.
Buy Now Pay Later for businesses is a great interest-free deferment of payment for small businesses running low on working capital. Governments have also offered aid to small businesses in their countries to digitise their businesses.
In fact, independent companies are offering this payment option to their regular customers and business partners to help them manage infrastructure costs.
Compared to traditional banks which are often tied down by regulations, Fintechs are bolder in venturing and going that extra mile to challenge the status quo. There are countless ways to create new products, services, and ecosystems and one of them would be BNPL for businesses. Fintech companies have done so by integrating shopping carts and apps at the point of checkout.
Imagine you’re a cafe owner and you’re now ready to give your outlet a revamp. With an intent into investing in new equipment for coffee-making, you’ve found a supplier for it. The problem is…your working capital is tied up.
Now, if there was a Fintech company that can help you orchestrate the sale with an efficient and cost-effective plug-and-play PayLater option, wouldn’t that be ideal?
The BNPL option is a financial model that is tailor-made to help SMEs purchase material, and equipment, or even facilitate renovations with easy repayment plans and hassle-free checkout processes.
The hybrid lending model connects merchants, lenders and customers all in one place with a seamless business BNPL repayment approach. The entire process is centralised under one expense management account for the BNPL option to work.
Many businesses are facing cash-tight situations in Southeast Asia and are exploring a medley of new options and opportunities. BNPL offers them the chance to boost average order value with each purchase and create a surge in conversion rates.
INFT partners with merchants looking to increase the number of merchant sales and signups, and form new partnerships. Despite the higher cost of borrowing, businesses are optimistic about the mix-and-match model because it caters to their business needs. By working with Fintechs like INFT, you can capitalise on the M2P model for a speedy go-to-market solution and tech support.
If you have customers who are ready to purchase from you but you’re unable to offer them split payments or extended payment terms because of cash flow concerns, get in touch with INFT right now to find out more about how YOU can offer your customers the PayLater option.
It is a win-win financial solution for both you and your customers.
Get in touch with us now by completing our Contact Form, email us at partner@inft.co, or call us at (+65) 6635 5668 today!
