Three ways BNPL can benefit FIs and PSPs
The rise of Buy Now Pay Later (BNPL) in recent years has been nothing short of remarkable. The payment method has enjoyed high levels of global adoption with the market being valued at US$132 billion, and expected to hit US$3.68 trillion by 2030. This unprecedented growth hasn’t occurred just by chance, it’s down to the whole host of benefits it offers financial institutions (FIs), payments service providers (PSPs), merchants and consumers alike. In this blog, we explore three key reasons why BNPL would be a valuable addition to any FI’s or PSP’s payments portfolio and the advantages they will see from incorporating it into their business strategy.
Encourage loyalty and increase engagement
BNPL is particularly popular among younger demographics, with 59% of Gen Z and 53% of millennials expecting to frequently use the payment method by 2026 (according to Insider Intelligence). Launching a BNPL offering will enable FIs and PSPs to widen their payment service portfolio and differentiate their businesses, enabling them to attract younger customers and tap into a lucrative market. Adding this payment option to their arsenal will also present their customers with a more flexible way to pay for goods and services, increasing cross-selling opportunities and encouraging loyalty amongst their existing customer base.
Grow your merchant network
A recent study from PYMNTS revealed that 53% of merchants said BNPL providers exposed their brand to new customers, and 47% said they had seen an increase in average order value. With these results, it is clear that providing merchants with the opportunity to offer BNPL as a payment option will elevate business growth. As such, merchants are actively seeking to work with merchant service providers (MSPs) and PSPs that can help them offer the type of BNPL that best suits their business strategy. As an additional advantage, MSPs and FIs that offer BNPL are more likely to see an increase in merchant retention.
Unlock new revenue streams
For FIs and PSPs, consumer credit and revolving credit lines are nothing new. However, BNPL allows them to build upon these traditional payment solutions and widen their existing service and product portfolios by offering a product that’s perfectly tailored for the world of commerce, unlocking a new valuable revenue stream for their business.
As the global popularity of BNPL continues to surge, financial institutions have a unique opportunity to leverage its numerous benefits. However, while these benefits are undoubtedly substantial, many FIs and PSPs are unsure where to start with BNPL and how to enter the market.
We invite you to read our latest guide ‘The Ultimate Guide to BNPL’ to find out how BNPL can improve your portfolio, and which flavour fits your business strategy. In this guide we breakdown the four key models of BNPL and highlight how this payment method can drive your business growth.
