E-Commerce Payment Gateways: The Rise of Buy Now, Pay Later

No matter how effective your internet marketing strategies are or how amazing your product is, everything hinges on the checkout stage of a customer's purchasing journey. It is here that the potential for friction is at its highest and a significant proportion of online shopping carts (more than 70% according to a study by the Baymard Institute) are abandoned entirely.

Another study by IMRG (the Interactive Media in Retail Group) found that most customers who did abandon their carts did so after completing 90% of the necessary purchasing steps. This indicates that an overwhelming majority of people decided to abandon their cart during the final checkout process. 

Myriad reasons for cart abandonment are cited by online shoppers, including hidden charges (for things like taxes and shipping), fears about payment detail security and being required to create an account. Another key reason is not being able to use their preferred payment method.

The IMRG study found that around half of total purchases were made using a credit or debit card. While digital wallets continue to be popular, the study found that a rapidly-increasing number of consumers were opting to use Buy Now Pay Later (BNPL) services. 

The number of companies offering BNPL services is growing correspondingly and includes ClearPay, DivideBuy, Payl8r, Laybuy and Zip Buy. The global BNPL leader is Klarna which, founded in 2005, now has millions of active customers across hundreds of thousands of merchants all over the world.  

Data from Statista reveals that the global number of BNPL users currently stands at more than 360 million and predicts that, by 2027, this will increase to over 900 million users. A study by Exploding Topics showed that the current global market for BNPL services is valued at more than £391 billion and forecasts that it will skyrocket to over £2.56 trillion by the end of the decade.

E-commerce retailers who are able to offer BNPL services to their customers can enjoy significant rises in both average order values and customer conversion rates. Especially during the cost of living crisis, affordability is absolutely key and BNPL services encourage customers to spend more. Not only does this result in increased revenue, it also enhances customers' satisfaction and thus their loyalty, making repeat purchases more likely.

As fully-accredited developers for every major payment gateway, Brickweb can help to integrate BNPL services into e-commerce websites, allowing you to enjoy these benefits. You can find out more on our website or by getting in touch with our team by phone or email.