BNPL Basics

The benefits of BNPL – What BNPL has to offer to a B2B webshop

PastPay Team

June 22, 2022

As a B2B webshop owner, you are probably eager to learn about the benefits of BNPL, a form of deferred payment for an e-merchant. Would it make business sense for you to offer your customers this increasingly popular payment option? And what about the risks to account for?

Our comprehensive guide gives you a detailed insight into the benefits and drawbacks of BNPL to make the best decision for your business. If the concept is still new to you, don’t panic. Our article will also briefly cover the most important things about the BNPL service. 

Are you ready? Please read on to learn the details.

Contents

What is BNPL?

The BNPL process

The benefits of BNPL

The risks of BNPL

BNPL from PastPay

The benefits of BNPL in a nutshell

What is BNPL?

Before moving to our list of the benefits of BNPL, let’s first clarify the exact meaning and process of BNPL. If you’re already familiar with the nuts and bolts of the service revolutionizing eCommerce, you can skip this part and continue with the benefits of BNPL, of course.

Meaning

The concept of deferred payment is probably not unfamiliar to you as a B2B e-merchant. You have indeed offered your old customers the option to pay later, and your contracts with large customers may even include that as a standard clause.

What makes BNPL different? How does it redefine the meaning of deferred payment?

BNPL is the acronym for “Buy Now, Pay Later.”

What’s new?

BNPL is a service rewired using digital technology. It makes deferred payment instantly available through new service providers, integrated into the online buying process. One of its benefits is that the service is free of interest and default charges and free of charge to your customers. This makes the user journey much more straightforward, elevating the customer experience to a higher level.

As a webshop owner, you will have the same experience as with card payment. However, you’ll get your money immediately after the sales transaction because, in this case, deferred payment is financed by the BNPL provider. The most important thing to know is that if you sign a contract with BNPL provider PastPay, the underlying form of financing is factoring rather than a loan. That is, the service will be free of charge for your customers.

The BNPL process

To give you a more precise picture of the service, please find the process of BNPL below: 

  1. A potential customer visits your webshop and selects  “Buy Now, Pay Later” out of the payment options listed on the checkout page. 
  2. Your webshop sends the customer’s tax ID no. to PastPay, based on which it performs the necessary checks.
  3. If your customer gets a green light, they can access the BNPL service immediately. If your customer accepts the contract terms, your webshop can automatically issue an invoice with the extended payment period. 
  4. The invoice is automatically sent to PastPay through the integration. 
  5. PastPay automatically pays your webshop 100% of the invoice value. 
  6. After the payment date, the customer pays PastPay the invoice in one lump sum.

We hope that now you have a clearer picture of the BNPL service. If you want more detailed information about this new payment solution, please read our article about BNPL. 

The benefits of BNPL

Here comes the most exciting part. What are the benefits of BNPL?

This service offers massive benefits both to your webshop and your customers. First, let’s take a look at the benefits of BNPL from your webshop’s perspective.

The benefits of BNPL for a B2B webshop owner 

1. Improving conversion rates

Being a webshop owner, you probably know that you may lose up to 80 to 90% of your customers between the home page and the checkout. So what is the reason for this churn? 

The main pain points include limited payment options, a complicated payment process, and the undefined total amount payable after credit card purchases. 

BNPL offers a fast, simple, and secure solution to efficiently manage the potential cart abandonment intent. This is a very simple process for your customers. They can use the service in a few clicks. In addition, the total amount payable will be clear throughout the process as the service is free of charge for them. Moreover, BNPL allows you to sell products considered too expensive by your customers before. Research shows that BNPL can improve webshops’ conversion rates by up to 30%.

2. Increasing cart value

Did you know that customers spend 10 to 40% more if they use the BNPL payment option over credit card payment?

An Ally Lending executive believes that offering the BNPL option may double the cart value. Which webshop owner doesn’t dream about such figures? 

Although growth of this magnitude is somewhat less common with B2B transactions, businesses, like consumers, also prefer the BNPL service thanks to its flexibility and simplicity. 

3. Reducing customer risk

Have you ever noticed that a customer opting for a bank transfer failed to pay for the ordered goods? 

BNPL prevents this from happening ever again. 

If you sign a contract with BNPL provider PastPay, the risk of non-payment will be off your shoulders. You don’t have to take any risk at all. The price of the ordered goods will always be transferred to your bank account. 

Another benefit of BNPL is that BNPL providers check your customers’ creditworthiness. Therefore, they can give you valuable feedback about your customers’ financial standing. 

Credit scores can play a decisive role when developing new customer relationships

4. Prompt payment

As mentioned above, BNPL allows you to get your money instantly while your customers enjoy the benefits of deferred payment. Once the invoice is made out, PastPay automatically pays the invoice value to your webshop immediately. After the payment date, your customers pay the invoice to PastPay in one lump sum.

5. Customer acquisition

Another benefit of BNPL is that it enables businesses to purchase the required assets without spending precious working capital. BNPL makes life easier also for businesses struggling with liquidity issues due to the pandemic. As a result, by implementing BNPL, you can attract new customers to your webshop.

6. Promoting customer engagement

The convenient, flexible, and transparent payment offered by BNPL increases customer satisfaction and engagement. And what’s the value of return customers for a B2B webshop? 

 The answer is obvious: they are more likely to convert, generate up to three times higher average cart value, and make purchases much more frequently than first-time webshop visitors.

7. Time and cost savings

Another benefit of BNPL is that you can expect similar or even lower costs than your current payment options. Moreover, you can also save on the costs of bank card payments. Your customer will pay to the BNPL provider on the payment date, and the provider will transfer the amount to your webshop in advance. 

By signing a contract with BNPL provider PastPay, you can fully outsource the management of your payment records. You can also expect to save significant resources and reduce administration. As a result, you can focus on the thing that matters the most: developing your business. 

8. Enhanced competitiveness

With BNPL gaining ground in the global B2B eCommerce market, your competitors will sooner or later implement the service in their webshops. 

For this reason, you need to offer this option to your customers as soon as possible. Those who act first can gain a competitive edge and win a significant market share from their rivals. 

The benefits of BNPL for your customers

The benefits of BNPL will also make shopping on your webshop attractive for your customers. Please read on to learn why.

1. Free service

A benefit of BNPL is that your customers can practically use the service free of charge. 

As you probably know, the underlying processes behind B2B transactions are a lot more complex than those behind B2C purchases. As a result, the amount spent might be ten times higher than a typical B2C transaction. 

It will be a major relief for your customers to know that with BNPL, they don’t have to pay interest, annual, and other charges. These benefits make BNPL a predictable payment solution for every webshop.

2. Improving liquidity

Liquidity is one of the most important financial indices for any business executive. Even if a customer can afford to pay for a large order, they may prefer to spend it on a different purpose. Therefore, businesses hit by the pandemic need to consider their decisions in this field even more carefully. 

Another benefit of BNPL is that it helps businesses improve their liquidity even in an unpredictable business environment. As a result, they can generate more revenue and achieve faster growth. 

3. Smooth customer experience

Quality products, competitive prices, fast delivery – what can hinder a purchase then, given all these benefits?

In many cases, poor customer experience is the showstopper. 

The new momentum triggered in B2B eCommerce by the pandemic seems to hold on. Now that customers have developed a routine for placing online orders for a wide range of products, they are looking for the most convenient solution. Moreover, they want to be able to put their orders with as few clicks as possible. Therefore, the following core requirement of B2B eCommerce is ensuring a smooth customer experience. 
BNPL provides precisely that. Clicking on the BNPL option on the checkout page of your webshop takes only a few seconds for your customers to learn whether they meet the terms of the service. Then, they can order the product with a single click using a swift and straightforward process, if they do.

4. Getting ready for the high season

Another benefit of BNPL for your customers is that they can replenish their inventories for the next high season without sacrificing precious working capital. 

They can buy their goods for the Christmas rush, for example, free of interest and any other charge paying the invoice conveniently when the busy period is over. They can also adapt to changing market needs much easier with BNPL.

5. Discount shopping

Another benefit of BNPL is that your customers can use a discount offer and place a sizeable order even when they didn’t expect to buy or are short of liquid funds. As a result, they can save high costs in the longer run.

Besides all those benefits, what are the risks of BNPL?

BNPL benefits offer a massive competitive edge to any B2B webshop in light of the above. 

Is it a silver bullet, then? 

Of course not. BNPL also has some risks that you should be aware of. Let’s take a closer look at them. 

Unexpected costs

Although BNPL has low costs, some service providers may charge not only a transaction fee but also additional fees (e.g., monthly or other subscription fees). 

The good news is that PastPay provides transparent costs and flexible terms to prevent that. Apart from the low transaction costs, there are no other fees to consider.

Customers are getting into a debt spiral

Some benefits of BNPL might turn into a drawback. As a webshop owner, you should be aware that BNPL may encourage reckless spending in some cases. Driven by flexible payment terms, some B2B players may neglect to track their inventories and overspend. In addition, as the payment date approaches, settlement may cause serious financial issues and may even lead to a debt spiral.

The good news is that a prudent BNPL provider strives to screen businesses prone to overspending in advance. Moreover, PastPay also protects you from the risk of non-payment. Consequently, the above issue doesn’t pose a threat to your business. 

A seemingly complex payment option

No matter how much it simplifies the buying process, BNPL may seem to be complex if not appropriately communicated. In addition, potential customers who are not that open to new technologies and prefer more traditional payment solutions may be reluctant to use the new payment option at first. 

In such a case, it’s essential to communicate the new option on your website efficiently. Do your customers believe that the process is too complex? Describe BNPL for them as a process accessible in a few clicks, simpler than card payment, as they don’t even have to give their card data. Are they concerned about the potential extra costs of BNPL? Let them know that BNPL is free of charge for them. Don’t your customers understand why it makes sense for them to use the new option? Prepare a short list of the benefits of BNPL. 

You may want to add these questions to your FAQ to help your customers access more information easily.

Obligation to register with service providers

Please note that customers must register with the given BNPL provider before using the BNPL service. So, suppose a user wants to purchase from several merchants not contracted to the same service provider. In that case, the question may arise: how many service providers are they willing to register with to use an attractive BNPL service?  

We have good news. Since PastPay is the only provider offering BNPL service to B2B webshops in our region, its customers can enjoy the benefits of BNPL without any drawbacks. For example, suppose a new customer has already used PastPay’s BNPL service on another webshop. They are more likely to select the new payment option on your website because they already know the service provider, the process, and its benefits. The benefits of PastPay’s BNPL service 

As explained above, if you select the right BNPL provider, the benefits of BNPL will well exceed its drawbacks. Being the first BNPL provider in the region, PastPayoffers a fast, transparent and secure solution to your business. 

If you sign a contract with us, you can enjoy the benefits of our automatic risk assessment process, enabling us to check your customer’s creditworthiness in seconds. This way, we’ll make the user experience seamless for your customers and provide accurate and valuable feedback on customer risks. Furthermore, to give you maximum peace of mind, we’ll even protect you from the risk of non-payment. 

You should expect similar or even lower costs than your current payment options. For example, with a payment term of 30 days, the total cost of BNPL service will be only 2 to 3% of the invoice amount. 
As another benefit of BNPL, we’ll enable you to outsource the management of your payment records fully. If your customer defaults on payment or fails to pay, we’ll also manage the collection process for you. As a result, you can save significant resources and reduce administration.

The benefits of BNPL in a nutshell

BNPL undeniably creates a win-win situation for B2B webshop owners and their customers.

As a B2B webshop owner using BNPL service, you can

  • significantly increase your conversion rates;
  • reduce customer risk;
  • increase average cart value;
  • improve your liquidity;
  • attract new customers to your webshop;
  • improve customer engagement;
  • save time and costs;
  • gain a competitive edge over your rivals. 

Your customers can:

  • use a free financing solution;
  • make a purchase in your webshop in a fast and simple way;
  • improve their liquidity and accelerate their growth;
  • prepare for high seasons without any hiccups;
  • save costs in the longer run.

Signing a contract with the right service provider, BNPL, will allow you to focus on what matters the most: managing your business and growth.

AUTHOR

PastPay Team

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