How Pay Later platforms act as inroads to E-commerce Success

By Kaustuv Kumar Das Mohapatra

India’s E-commerce industry is growing at a breakneck pace in all categories, and customers are looking for more affordable payment solutions and methods for their purchases.

Pay Later platforms have quickly become a popular online payment option among DTC e-Commerce merchants across the globe and in India.

What is Pay Later?
A Pay Later solution (also referred to as Buy Now Pay Later or BNPL) is a payment option that allows customers to pay for purchases in monthly instalments rather than all at once at the time of checkout.

This unique payment option has been growing rapidly over recent years. According to the data on this report from Business Wire in 2022 , almost 22% of consumers in India bought goods using Pay Later services and the 26 to 35 age group forms the primary segment of Pay Later users.

Nearly 70 Million customers in India have the access to credit accounting for 7% of the total population; and yet, 93% of Indians do not have access to credit in India. This makes the Pay Later market quite competitive for industry providers. The Pay Later concept has been around for a very long time. At its core, Pay Later isn’t much different from the old-fashioned instalment plans that date back centuries. However, there’s one big twist that’s made Pay Later invaluable to businesses: with third-party service providers, the merchant gets paid immediately for any purchases made by customers.

Benefits of Pay Later platforms for Online Commerce Businesses

Pay Later platforms can offer E-commerce businesses a number of advantages.

1. Expanding existing customer bases
Customers want large purchases to be more affordable. Merchants can offer Pay Later solutions to the new set of buyers who are looking to make purchases on convenient terms and split their payments. Pay Later companies also pay merchants the full amount right after the purchase, which means that merchants can confidently offer these solutions without any financial risk.

2. Ensuring Greater Customer Loyalty

Positive customer experiences mean more sales. If customers can depend on a hassle-free experience, they will be more likely to return in the future.

3. Gives Businesses a Competitive Advantage
With increasing interest and adoption in Pay Later among some consumer age groups, chances are that your competitors are already integrating these into their business. Customers enjoy the flexibility and benefits of using Pay Later. That means that they’re likely to buy from a merchant that offers Pay Later as a payment method. Integrating Pay Later into your checkout will help your business stay competitive and provide an advantage over competitors who have not yet implemented it into their business.

4. Ensures repeat customers
There is a high chance of customers who have already purchased from Merchants through a Pay Later option to turn into repeat purchasers. Splitting payments makes the purchase affordable to customers and the seamless experience helps retain them.

5. Cross-promotion of products by Pay Later Platforms
Pay Later companies promote their partners actively via their app, website and social media channels, which helps merchants acquire new customers. They also run active marketing efforts such as offers, discounts etc which can help a new Online Commerce business scale up fast and acquire new customers.

Other advantages include boosting conversion by removing shoppers’ buying hesitations, increasing average order value (AOV) and opening a new stream of income via interests on loans.

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