RFI Global: Retailers who haven’t adopted BNPL don’t fully understand it
August 11, 2022
Previously in this blog we have talked extensively about Buy now, pay later (BNPL); its benefits, its faults and everything in between. But according to new data revealed by RFI Global, a global data and insights company focused on financial services, many merchants are not making use of BNPL because of a misunderstanding on the retailer’s side.
According to the analysis, 61% of retailers revealed this form of paytech had improved their access to new customers, leading to a significant growth in revenue.
here are now 17 million people in the UK who have or are using BNPL services. According to the data, new customer acquisition improved for 59 per cent of retailers and just under half said customers were making more frequent purchases.
However, while BNPL may offer benefits to those retailers that have adopted it, 63% of businesses are not planning to use it as a payment method due to it not being relevant, according to them, and another percentage is worried about their reputations for offering a payment method that could lead to spiraling debt for customers who have missed their payment installments.
As covered by The Fintech Times, the UK government announced last month that it will require BNPL providers to conduct credit checks on users of its services and register with the Financial Conduct Authority (FCA), but this may not take effect until 2024.
Lack of understanding
According to RFI’s data, one in five retailers in the UK are not entirely familiar with how exactly BNPL works for businesses; they are afraid to expose themselves to credit risk. Spoiler alert: the BNPL provider takes all the risk, not the retailer.
Mark Schultz, global head of business at RFI Global, points out the lack of understanding towards BNPL is likely putting a halt to growth, and educating these retailers who are still in the dark about how BNPL works, will accelerate the uptake of BNPL, not only in the UK, but also globally.
As such, certain incentives have been offered for businesses to begin accepting BNPL, such as reduced fees, contract flexibility and streamlined onboarding.
Even though many retailers are becoming more welcoming towards BNPL, one third of non-accepting businesses said that nothing would change their minds towards BNPL.
As a business, you are in control of which payments you accept and why or why not, however, as inflation continues to rise, it is important that your business offers ways for customers to be able to pay for your goods or services, and BNPL is becoming increasingly popular due to the flexibility it affords to those who don’t have all of the funds right away.
Want to learn more? Check out The Fintech Times’s full write-up here.
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