Trans4mind Home Page
Home Article Library IT, Internet, Computers & Mobile Apps

How ‘Buy Now, Pay Later’ is
Transforming Online Shopping

Buy Now, Pay Later

E-commerce is booming for several reasons and one of them is most certainly the fact that it sees a lot of new incoming trends regularly, which play a major part in keeping the e-commerce industry progressing. One of those trends that has been around for some time now is the option of paying over-time in fixed monthly installments. The trend that has shaken the traditional credit industry has slowly become a major outlet of payment for the customers.

The number of people making their purchases online has been steadily growing for many years and the growth rate is currently higher than ever, mostly due to the current pandemic. Consequently, more and more people are using the option to buy now and pay later, even when they buy some homeware. What was once reserved only for more expensive purchases is now very much present in many daily transactions. For example, it’s used in about 10% of all online sales in Australia.

This option is particularly popular among millennials, who prefer the option of mobile-first payment methods like pay-over-time financing. With many providers allowing this option, the customers can choose the one they find most attractive, especially since all major providers show the entire cost of the purchase upfront, i.e. without surprising late fees. So, let’s take a closer look at how BNPL is transforming the e-commerce industry at the moment.

Understanding the concept

It would be wrong to present this idea as a new one. It’s actually very similar to the “layaway” option that was prevalent in US departmental stores for quite some years. The concept is similar, but modernized. Namely, you can use this option to buy an item through monthly installments over a particular period and after that period you become the owner of that item. This mode of financing helps budget-conscious customers get a great deal, as they can buy expensive items through its assistance.

How does it work?

It’s actually quite simple. You want to buy an item of a particular amount and as it’s a bit expensive for you to buy on the spot or you don’t want to spend so much cash at once, you choose to pay in installments. Most reputable institutions offer interest-free options, which is the reason for the popularity of the humm90 interest free credit card in Australia, which allows up to 110 days interest-free.

When you establish that the store in question allows an option of buying the item in installments, you chose that option and you’re sent a message containing a link to apply for financing with a pay-over-time provider. Next, you open the link and provide the necessary details, such as your name, date of birth, contact number and last four digits of the social security number. The approval process doesn’t take long, and you soon get a notification regarding the approval of your pay-over-time request. The notification contains information regarding the amount she has been approved to spend. The best part about this whole process is that it doesn’t affect your credit score at all.

Your next step is to select the monthly option of 3-, 6- or 12-month repayment terms. Once you choose the option that suits you, you’ll be presented with information about the amount you’ll have to pay every month with interest, if any. This monthly amount depends solely on the option of monthly payments you’ve selected.

The e-commerce merchant gets the money straight away by subtracting the fees that the company has to pay for the financing provider. Many stores have tie-ups with financing providers to free themselves from storing up customer installment payments.

Having completed all the formalities, you start paying up the negotiated monthly installments to the financing provider, who doesn’t charge any late fees or interests and who collects the agreed monthly installments. Once you’re done with all the installments, you become the owner of that item. The buying experience is effortless and efficient, which creates an amazing user experience.

What’s in it for the online store?

The BNPL option creates a win-win situation for both customers and sellers. While customers are able to get pricey items more easily and are attracted by an opportunity to have flexible payment options, it’s online retailers who are perhaps benefiting even more.

To begin with, various reports show that after some businesses integrated a BNPL option, their average order value rose significantly, especially if they made the process transparent. This also increases customers’ trust in the retailer and, consequently, boosts brand loyalty. Next, it’s quite clear that younger people are more inclined to use this option and since they make more purchases than older generations, it’s clear that online retailers can only benefit for catering to the needs of the most powerful group.

We can also rightfully say that, when provided with the option of pay-over-time, customers tend to buy more items online deliberately, which leads to fewer returns. According to some experiences, return rates have reduced significantly through the BNPL option. There is also a notable reduction in abandoned cart rates. Namely, paying over-time reduces the effect of the price as a hurdle, which is why the rate drops. Finally, online retailers that provide excellent user experience, i.e. those that make the process seamless and transparent, can count on satisfied customers recommending them to their friends, family members or acquaintances.


If you run an e-commerce business, or are thinking about starting one, you should be aware that your customers need to be your topmost priority and take steps accordingly to provide great value for money and attract as many customers as possible. Integrating your business with pay-over-time solutions is one such step that will help out your customers in a lot of ways. By allowing customers to own high-priced products through monthly installments, you’re creating benefits for both your business and your customers. Finally, as you can see, many e-commerce businesses have introduced various pay-over-time options, which means you need to do the same if you wish to keep up with your competitors. Otherwise, people would turn away from your business and go to those companies that allow such flexible payment options.

Internet IndexMarketingUse of Internet &MobilesSocial NetworkingWebsite Design & SEOComputers/TechnologyCryptocurrencies
You'll find good info on many topics using our site search: