Buy Now Pay Later (BNPL) companies are tired of getting scolded by regulators and consumers so now some are going to see if changing their colors will work.
PYMNTS reports that BNPL companies are doing three things to try and change the scowls they’re seeing. One is changing the way consumers pay. No longer is it just only “pay in four months,” but now Klarna, for one, is wooing consumers with up to 24 months.
The second major move comes from Sezzle, which has tailor-made limits based on a person’s credit history – and how much business you’ve done with Sezzle.
“These are no ’80s installment plans, but inherently flexible payment options for a new era of digital shopping,” the authors of PYMNTS latest FinTech Tracker Series Report, said.
Lastly, BNPL’ers are trying to tackle “cart abandonment.” Now you, as a consumer, aren’t all that concerned about putting something in a cart when you shop online and just leaving it there, but it makes sellers crazy. Not only because it’s a sale that might or might not ever come to fruition and they don't know whether to bug you to death, offer you a discount to finish your check-out process or what.
To reduce cart abandonment, online shoppers might start seeing payment widgets designed for the direct-to-consumer (D2C) market. In one case – Cashfree Payments’ BNPL Plus – led to a 30% reduction in cart abandonment rates and a 40% uptick in average order sizes, so it’s likely more D2C stores will employ something like it.
BNPL: more players, more places, more often
Consumers can expect to see BNPL options popping up everywhere – even grocery stores and restaurants. Amazon is now invested in BNPL.
Even some of the old fogeys of retail – Fingerhut, Montgomery Ward, and Sears – are trying to rejuvenate their lives by offering BNPL on their shopping platforms.
And there’ll be tons more opportunities, too, because there are new players licking their chops and wanting their own piece of the BNPL action. According to DealRoom, there are now 170 or more startups competing in the BNPL space. With the holidays around the corner, consumers can expect to see more come hither cooing from those companies, too.
Experts continue to caution consumers
No, they’re not your parents. Nor are they Jiminy Cricket, but financial experts think that consumers are buying into BNPL without thinking about the consequences.
“It’s a concerning trend that some experts say has the potential to put Americans deeper in debt,” Alia Dudum, LendingClub’s millennial money expert, told ConsumerAffairs.
She says one place where consumers need to stop and think before using BNPL is large-ticket items. Take appliances for example, where you “think” you “should” be able to pay off a $800 refrigerator in four months, but when you don’t and that 30% interest kicks in, you’re really behind the 8-ball.
“The product as it’s constructed today stimulates impulse buying without giving purchase protection as credit cards do, nor does it deliver the benefits of positive payment reporting to credit bureaus. If you’re struggling to pay bills or build savings, adding a new payment could put a strain on an already tight budget,” is Dudum’s sermon.
“As a good rule of thumb, if you cannot afford the non-essential item in full, you should not rely on being able to afford it in the near future. So, while BNPL is convenient, make sure you’re not overextending yourself.”