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While BNPL companies make money from interest and late fees on the customer side, they also charge a merchant fee. This is the percentage of the transaction that you pay the provider, which is included in the overall price of the goods or service being sold. So, as a business, you should consider whether your profit margin will be able to withstand the additional cost.
The merchant fees for ‘buy now, pay later’ solutions are higher than those of traditional credit providers. Afterpay currently charges merchants 30 cents per transaction while Zip Pay’s merchant fee is “dependent on your business and interest-free period you choose to offer your customers” according to its website.
However, not using a BNPL may come at the expense of losing a potential conversion altogether.
In addition to merchant fees, integrating Afterpay or other BNPL solutions could also mean your business will face additional set-up costs, depending on your existing technology.
Most providers assure potential partners they’re compatible with commonly used e-commerce, POS systems and payment gateways, but it’s worth finding out if your billing platform is included in this list, so you don’t have to splurge on implementing new tools.
Adopting a ‘buy now, pay later’ solution for your business is highly appealing given the prospect of generating more sales and expanding your customer base. The future of the sector looks promising and your business could benefit greatly from the industry’s evolution.
If the benefits outweigh any costs and there are no technological roadblocks, there’s almost no reason why your business shouldn’t embrace BNPL.