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Why buy now, pay later increases website conversions

If you’re like most e-commerce merchants, the best part of the shopping journey occurs when a shopper clicks the “buy” button and becomes a customer. One great way to increase these website conversions for your business is to give customers the option to pay later—as in “buy now, pay later.”

In fact, offering a buy now, pay later option to your customers can increase e-commerce conversion rates 20-30%, according to a recent RBC Capital report. Shoppers have embraced this form of flexible payment so much that the total buy now, pay later sales volume in 2021 grew an estimated 41% over the prior year, and it’s expected to double by 2024.

Here’s why offering a buy now, pay later (BNPL) option to shoppers on your website can help convert more of them into customers.

1. Buy now, pay later helps ease ‘sticker shock’ at checkout

Many shoppers abandon their carts once they see the total purchase price, because it often includes added charges like tax and shipping costs (the top reason for cart abandonment). But seeing a BNPL option can relieve the pressure of having to pay the total price immediately, and this can help shoppers fit the purchase into their budget. In fact, a study by the Motley Fool found that buying something that would usually be “out of budget” is the most common reason shoppers are choosing to buy now and pay later.

Offering a pay-over-time option like Affirm to shoppers can also pull sales forward, resulting in incremental e-commerce conversion and revenue gains. In a recent study of Affirm users, 29% said they would not have completed the purchase if Affirm wasn’t available. And nearly half (45%) would have delayed the purchase.

2. Buy now, pay later is becoming a common payment method 

In recent years more and more shoppers have used BNPL options as a way to buy what they want while managing their personal cash flow. A C+R Research study in April 2021 found that 60% of shoppers had used a BNPL service in the last year.

Once they’ve made a purchase and paid for it over time, many shoppers are inclined to buy this way again. In fact, a recent survey found that 3 out of 4 Americans who made a BNPL purchase for the first time during the pandemic said they’ll continue to make similar purchases after the pandemic is over. Giving customers options at checkout ultimately helps increase your website conversions now and in the future. 

3. Many shoppers expect a BNPL option at checkout

Some shoppers prefer BNPL so much that it factors into their decision of where to shop. A recent Affirm survey found that just about half (49%) of shoppers will only buy from retailers that offer a BNPL option. 

“Our latest Consumer Spend Report shows nearly half of consumers will only complete a purchase if a merchant offers a pay-over-time option at checkout,” said Silvija Martincevic, Affirm’s Chief Commercial Officer. “This shows how important it is for retailers to offer customers payment flexibility that will not only increase conversion rates, but will also help to bring those customers back.”

4. Offering BNPL cuts friction at checkout to increase e-commerce conversions

In addition to preventing abandoned carts due to sticker shock, offering a pay-over-time option can reduce friction in other ways. Many shoppers (58%) say they’d rather use BNPL than a credit card—often because they want to avoid paying interest charges or hidden fees. Transactions made with BNPL are easy to understand and often interest-free. And when shoppers check out with Affirm, for example, they see payment terms and schedule up front, without any hidden or late fees.

This level of transparency makes it easier to commit to a pay-over-time purchase, which in turn can help increase your e-commerce conversion rate. It can also deliver a bonus for your business by building trust. Our research found that 60% of customers had more favorable views of brands that offer flexible payments.

Today, e-commerce businesses of all sizes and types are seeing increases in e-commerce conversion rates because they offer buy now, pay later options at checkout. In the apparel category, for example, adding BNPL helped lift conversions for luxury fashion brand LuisaViaRoma (+21%). And ONDO, an online socks retailer on the Shopify platform, saw a 28% boost in conversion after offering BNPL with Shop Pay Installments (SPI).

If you’re considering offering a BNPL option to your customers, here are 5 questions to ask that can help determine which provider is right for you. Or visit the Affirm site to learn more about how Affirm can help increase sales for your business.

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