Recession-resistant retail: Benefits of buy now, pay later for merchants

Buy now, pay later has benefits for both your customers and your business. Learn how it can help you drive revenue.

It may be true that change is inevitable, but lately it seems to be happening more rapidly than ever. Just when we were finding our new normal after the pandemic, inflation hit, and while the full effects remain to be seen, we could be heading for another recession.

Enterprise retailers have had to quickly adapt to the digital transformation, while also working to maintain sales during these sudden economic downturns. But all this change also presents an opportunity to lessen the stress of shopping, build trust with your customers, and increase conversions and average order value (AOV).

How? One way is by offering the right ​​buy now, pay later (BNPL) solution. Let’s take a closer look at the benefits of buy now, pay later for merchants — and for their customers.

Meeting customers’ changing needs

We’re living in unusual times. Unemployment is low, at just 4.2%,¹ and consumer spending is proving to be resilient, continuing to grow despite high prices.² But this may not tell the whole story. To keep up with rising prices, Americans have used much of the record savings they amassed during the pandemic.³

That could be why 63% of BNPL consumers say cash management is a reason they use the payment method⁴ — helping to provide a sense of certainty in these uncertain times. If you’re wondering, “Why should I offer buy now, pay later?” the answer starts with meeting these changing customer needs.

Flexibility

For many consumers who are really feeling the economic downturn, the ability to shop now and pay later could be the difference between affording essentials, such as groceries and home goods, and going without: 21% of people in a 2023 survey had used BNPL for groceries, and 27% have used BNPL to carry them through to their next payday.⁵

Ability to budget and save

Consumers may want the option to pay for a product over time, but they don’t want the added expense or stress of interest charges. The predictable, interest-free payments of many BNPL solutions could be just what they’re looking for: 50% of BNPL users say they “wanted to pay in installments/spread the cash flow.”⁶

Credit alternatives

Along with inflation, credit card debt in the US surged by $24 billion in the third quarter of 2024, compared to the previous quarter, and $87 billion compared to the previous year.⁷ While some available solutions do have interest, there are also interest-free installment options that could make BNPL an attractive alternative to credit. In fact, 83% of BNPL users surveyed said they found it more convenient than using a credit card,⁸ and 76% said BNPL was more financially responsible than credit cards.⁸

Benefits of buy now, pay later for merchants

These consumer trends point to an opportunity for enterprise retailers: Adding BNPL options to your ecommerce site can give your shoppers the flexibility and confidence they crave right now. It’s great for customers – but what are the benefits of buy now, pay later for businesses?

Help boost reach

Offering BNPL can help you boost your reach in several ways. Gen Z and millennials use BNPL more often than other generations, at 51% and 55% respectively.⁶ Plus, 13% of consumers have abandoned a purchase due to a lack of payment options.⁹ In addition to reaching younger demographics, flexible financing options also empower customers to buy larger items they might otherwise put off: 25.6% of BNPL users did so to pay for larger purchases.⁴

Help drive conversion

Offering the option to buy now and pay later can help shoppers feel like they have more buying power — and that can help drive conversion, one of the most common BNPL business benefits. When you consider that 67% of PayPal Pay Later users have abandoned a purchase because PayPal Buy Now Pay Later options were not available at checkout,¹⁰ it’s easy to see why offering BNPL is a smart move.

Improve customer experience

Frictionless customer experiences can help your brand stand out when it’s needed most. Luckily, the BNPL process doesn’t have to be complicated. PayPal has more than 432 million active accounts worldwide¹¹. Since these shoppers already have an account with PayPal, the Pay Later application process is easy. Pay Later uses rich historical data and risk modeling to make speedy decisions and keep checkout flowing smoothly.