Peyton Hamel on | 3 min read
WooCommerce, being a popular ecommerce platform, supports a wide variety of payment options for online stores. One of the most common payment options for WooCommerce includes Buy Now, Pay Later (BNPL) payments. A new WooCommerce store should consider including BNPL payment options within their checkout sections because it offers an additional method (short-term financing) for customers to make purchases. While convenient, however, they have some drawbacks.
BNPL payments refer to a type of payment method that allows customers to purchase goods or services and pay for them in installments over time, rather than paying the full amount upfront. BNPL payments are considered a type of loan, also known as point-of-sale installment loans. This payment method has become increasingly popular in recent years, particularly among younger generations and online shoppers. BNPL payments are also more common during periods of high inflation and rising interest rates.
With BNPL payments, customers can typically split the cost of their purchase into multiple payments over a chosen, set period of time, which is generally anywhere from a few weeks to several months. The payments are interest-free in most cases, but some BNPL providers may charge interest or fees for late payments.
BNPL payments are facilitated by a third-party provider or payment gateway that offers the option to customers at checkout. Merchants that accept BNPL payments benefit from increased conversion rates and customer loyalty, as well as the ability to offer more flexible payment options to their customers. However, it’s important for merchants to carefully consider the risks and potential costs associated with BNPL payments, such as chargebacks and higher transaction fees.
There are several benefits of BNPL payments for both customers and merchants.
Increased Conversion Rates: BNPL payments can help merchants increase their conversion rates, as customers may be more likely to purchase if they have the option to pay for it in installments rather than upfront. This eases the purchase of larger orders, which customers may be hesitant to pay for all at once.
More Flexible Payment Options: When merchants offer customers more flexibility in how they pay for their purchases, customers are more likely to order because they can adjust to a tight budget or irregular income. By spreading payments over time, customers can better manage their cash flow and avoid increasing debt.
Improved Customer Loyalty: Offering BNPL payments can help merchants build customer loyalty, as it provides a convenient and flexible payment option that can help customers feel more comfortable making purchases from the same merchant again in the future.
Reduced Abandoned Cards: BNPL payments help reduce the number of abandoned carts. More often than not, customers abandon carts due to high upfront costs of their purchases, leaving the order incomplete. If customers have the option to pay in installments, there is a lower likelihood of abandoned carts.
Higher Average Order Value: BNPL payments help increase the average order value at one time because customers may be more likely to add additional items to their cart if they know they can spread the cost of the purchase over time.
Overall, BNPL payments offer several benefits for both customers and merchants, but it’s important for merchants to carefully consider the risks and costs associated with offering this payment option:
Increased Risk of Fraud: BNPL payments can increase the risk of fraud, as costumes may use false information or stolen identities to apply for payment plans. However, this risk is extremely uncommon.
Higher Transaction Fees: BNPL providers may charge higher transaction fees compared to other payment options, which can increase the cost of doing business for merchants.
Increased Administrative Workload: Merchants may need to spend more time and resources managing BNPL payments, such as verifying customer information, processing payments, and dealing with disputes.
Potential for Chargebacks: Chargebacks can be a concern for merchants that offer BNPL payments, as customers may dispute charges if they are not satisfied with their purchase or if there is a payment issue.
Customer Service Challenges: Merchants may need to provide additional customer service support for customers who have questions or concerns about their BNPL payments. However, this can also be a benefit because it’s expending time and energy on customer service, which can be extremely rewarding for both merchants and customers.
Even though there are drawbacks to BNPL payments, merchants can avoid these issues if they ensure that they work with reputable BNPL providers such as Affirm and Klarna, who have clear policies and procedures in place to manage BNPL payments and disputes.
To accept BNPL payments on a WooCommerce store, you can follow the following steps:
Choose a BNPL payment gateway that is compatible with WooCommerce. Some popular options include Klarna, Afterpay, or Affirm.
Sign up for an account with the chosen BNPL payment gateway.
Install and activate the WooCommerce plugin for the selected BNPL payment gateway. You can usually find the plugin on the payment gateway provider’s website or in the WooCommerce plugin directory.
Configure the plugin settings by entering your payment gateway account details, such as your API keys or access token.
Enable the BNPL payment option on your WooCommerce store checkout page by going to WooCommerce > Settings > Payments, and then selecting the payment gateway plugging you installed.
Customize the payment gateway settings to your preferences. You can set up minimum and maximum order values, payment plan options, and other options.
Test the payment gateway by placing a test order on your store to ensure that the BNPL payment option is working correctly.
Once you have completed these steps, your customers will be able to select the BNPL payment option at checkout and complete their purchase using the payment plan option provided by the BNPL payment gateway.
If you are establishing a WooCommerce store or are expanding upon your payment options, consider centralizing your payment methods through a WooCommerce plugin such as PeachPay. PeachPay allows vendors to integrate their payment options like BNPL payments at the same place and at the same time through a one-click checkout process.