While it may seem counterintuitive to not take a full payment upfront and instead taking payments by instalments, there are certain benefits to not only consumers, but merchants too!
We’ll dive right in…
Enhanced shopping experience and build brand loyalty
From the view of the customer, splitting a payment into manageable chunks is always a bonus. For the merchant, by creating a more seamless experience for your shoppers, you increase the chance of their return. By enabling higher value purchases you are enabling shoppers to buy products that they maybe couldn't have afforded to purchase in one go - creating a more positive shopping experience increasing brand loyalty.
Increase sales and conversion rate, whilst reducing cart abandonment
The addition of payments in instalments increases the likelihood of those more frugal shoppers to stay and complete their purchase, that they otherwise may have not have done. Splitting payments over a certain time period takes the ‘risk’ out of a lot of purchases, meaning shoppers make more favourable (to the retailer) calculated decisions on affordability at checkout.
Increase AOV and LTV
Shoppers tend to spend more when they are provided with a buy now pay later option. In addition to an increase in the value of the basket, many merchants also see transaction rate increase. People are more likely to make a purchase if they can take it home the same day and pay later, rather than strive to save up to buy an item in the future. A positive purchase experience is so crucial to customer retention, so by creating these seamless experiences for your consumers they are more likely to come back and add to their lifetime customer value.
Improve retention and acquisition rate
Payments in instalments draws in those savvy shoppers who are on the lookout for budget buys - the item becomes more attractive if the buyer knows they can pay for the item over a couple of months. Additionally having your customers pay over a number of weeks or months, you are letting them stay in touch with you - they are more likely to remember you as they continue to pay you. This allows you to not only remind them how much is left outstanding on the payment, but remind them of the positive experience they had with you and other great offers.
And best of all? You’re paid upfront and in full.
As the merchant, your payment provider takes the responsibility of the credit risk - meaning you are paid the full amount, leaving the customer to repay the payment provider.