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Cover: Understanding buy now, pay later services

Buy now, pay later (BNPL) services are changing the way customers shop. Understand what BNPL is and whether it's a good fit for your business.

What is buy now, pay later?

Buy now, pay later (BNPL) is a payment option that allows a customer to make a purchase without paying the total price upfront. Instead, the buyer pays one instalment at the time of purchase and pays the remaining balance in interest-free instalments over a pre-set period of time.

Though the customer pays the balance over a set period of time, businesses are paid the total amount at the time of purchase.

It is most commonly seen in retail stores, but can be used across other business industries such as travel, vehicle repair and food and beverage services.

Benefits for your business

Though BNPL providers take a percentage of your profit, there are some key advantages to including BNPL as a payment option.

  • Increased sales – customers are more likely to feel comfortable making a larger purchase when upfront payment is not daunting. BNPL services offer the ability to spread the overall cost over a period of time. BNPL customers also tend to purchase more things, as the initial cost is low.
  • No outstanding invoices – your business gets paid in full at the time of purchase, so there is no risk of an invoice not being paid.
  • Remain competitive – as BNPL services become more common, offering it as a payment method can help keep your business in competition with others in your industry.

Things to consider before offering BNPL

BNPL services can increase your revenue and attract new customers, but there are a few things to keep in mind when considering the payment type or choosing between providers.

  • Price of your product – some BNPL providers have a minimum order amount. Compare the different options to make sure your products can be sold using the service.
  • Payment terms for your customers – it's important to remember that BNPL services involve your customers taking out a loan with the service provider. Make sure you feel comfortable with this model before offering the service.
  • Fees and charges – in exchange for offering customers interest free payment plans and loans, BNPL services take between 2% and 8% of the purchase price from the sale. Compare rates and choose the best platform for your business.

How to offer BNPL services

To offer a BNPL service to your customers, you'll need to research and select a BNPL provider that suits your business.

Once you've selected a provider, you need to sign up with them as a merchant. Once your application is approved, you'll need to integrate the system into your online or instore payment platforms.


For more information visit www.business.gov.au

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