The Simple Way for Customers to Buy Now and Pay Later (Save Abandoned Carts)

12 Jun 2017 6 min read

When a visitor spends time browsing your online store or bricks-and-mortar outlet, they’re looking for something. And when they find it, they’ll be tempted to buy it. But before they finalise their decision to purchase, they’re likely to ask themselves:

  • Can I really afford it?
  • Is it cheaper elsewhere?
  • If I wait, will it go on sale?
  • Do I really need this it?
  • Should I buy something else?
  • Should I save my money for next month’s phone bill?
  • Will it max out my credit card?

You’ll notice these are all financially motivated questions that deal with why they should purchase, where they should buy from, when, and how they should pay. They’re the sort of questions that lead to a shopping cart abandonment rate of almost 70%, and they could become big obstacles to your sales—but they don’t need to. One of the most effective ways to get these shoppers across the line is to offer payment options that make it easy for them to take advantage of the great deal you’re offering them right now.

That’s what’s prompted the creation of “buy now, pay later” services like ZipPay (by ZipMoney) and Afterpay. These third-party finance providers offer flexible payments with an interest-free period, so your customers can pay for their orders over a period of time while enjoying their purchases straight away. It’s a bit like a lay-by mixed with in-store finance and dragged into the present day app economy.

Here’s what you need to know:

Customers Love to Buy Now, Pay Later

What’s not to love? It lets them seamlessly buy what they want, when they want it (now!), online or in-store without having to pay upfront. Even better, they get an interest-free period, automated deductions from their selected debit or credit card, and reminders to make sure they don’t miss any payments. And there’s no time wasted on complex forms or finance approvals—customers simply sign up online or in-store with just a few personal details and their card details.

Store Owners Benefit From Offering a Pay Later Service

Ecommerce and physical store owners are drawn to services like ZipPay and Afterpay because they provide a simple solution to offering risk-free customer finance. Yes, risk-free—they wear all fraud and credit risk, and you’re guaranteed to get paid. Even better, both these companies offer same-day settlement, improving your cash flow and ensuring you never have to worry about unpaid invoices. And the fee structures are transparent and easy to understand—not like credit cards! As an added bonus, payment processors often feature their merchants on their website, so you reach a new audience.

But most of all, store owners love the pain-free payment process, which helps get customers across the line. That means they’re seeing large increases in the metrics that matter, like shopping cart conversion rates, repeat business, and total order value.

The Buy Now, Pay Later Process is Simple

Each company offers a slightly different service, so you’ll need to check out the available options and decide which ones are a good match for your brand. But, roughly speaking, they all work like this:

  1. As a merchant, you sign up with one of the available payment processors and add your new payment method to your point-of-sale or online shopping cart software, or both.
  2. Online shoppers select the payment option at checkout and enter the details of their credit or debit card, which creates their new pay later account. In-store customers sign up to the service online (probably on mobile phones, while in the shop), and then use a unique barcode or PIN to pay at the point of sale.
  3. You deliver the goods to each customer immediately after the sale, either across the counter or via your freight partners.
  4. On the same day, your account is credited the full amount of the sale (not just a deposit!) by the payment processor.
  5. The payment processor deducts payments from the customer’s account according to the agreed schedule, sending the customer a reminder a few days out to make sure they’ll have sufficient funds.

That’s the whole lot in five simple steps—much easier than setting up a lay-by or issuing a store card!

Merchant and Customer Fees Are Usually Low

ZipMoney, AfterPay, and similar payment processors charge merchants a small fee on each transaction, and some may also charge set-up or subscription fees. The fees tend to be comparable to credit card merchant fees, but more transparent. But don’t let that put you off—many merchants are reporting significant increases in total sales, and average order values jumping by over 50%, which is more than enough to make up for the fees.

It’s good news for customers, too: most pay later services won’t charge them any fees, unless they miss a payment. And that’s hard to do, because the payments happen automatically! (Some companies, such as ZipPay, also let customers choose a longer payment term for a small monthly charge.)

Choosing The Best Buy Now, Pay Later Service

ZipMoney and Afterpay are currently the two main providers in Australia, but this space is growing, so it’s likely there will be more options available over the next few years. They all offer a similar service, but with slightly different fees and payment structures that may make them more or less suited to your business—something to keep in mind when you’re making the decision. Some retailers are giving their customers even more choice, by offering both ZipPay and Afterpay.

Another major factor you’ll want to consider is how readily the service can plug into your existing ecommerce and point-of-sale software, so you can avoid costly customisations. Neto currently supports ZipPay (by ZipMoney), andAfterpay. And you can always ask your customers if they’re opting to pay later when they shop in other stores, and suss out what your competitors are using.

Buy now, pay later services are an appealing option for merchants and customers alike. The sooner you get started, the sooner you can break down the barriers to buying, and boost your bottom line.

Neto is a leading ecommerce platform designed to help your business grow across multiple channels. With fully flexible navigation, customisable shopping carts, and native support for the most popular payment gateways, our powerful platform takes care of the details, so you can concentrate on the big picture. If you’re ready to take advantage of this great new payment method, talk to us about adding ZipPay or Afterpay to your Neto store.

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