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 3.7%,1 and consumer spending is proving to be resilient, continuing to grow despite surging inflation.2 But this may not tell the whole story. Thanks to rising prices, real hourly earnings are declining3 and Americans now have less savings than at any point since the Great Recession of 2008.4

That could be why 81% of consumers said they prefer BNPL because it allows them to maintain a cash cushion5 – 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.


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: 75% of BNPL users see BNPL as a way to buy what they need without waiting.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: 76% of BNPL users say that it helps them budget and manage their cash flow.5

Credit alternatives

Along with inflation, credit card debt in the US surged by over 40 billion U.S. dollars in 2022 compared to same quarter of the previous year.6 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, more than 7 out of 10 BNPL users surveyed said they preferred it to credit,7 and 59% even said they would be happy using BNPL to replace their credit cards.7

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. Almost 75% of BNPL users in the US are Gen Z or millennials.8 Plus, 48% of BNPL users have abandoned a purchase because they didn’t see a BNPL option.9 In addition to reaching younger demographics, flexible financing options also empower customers to buy larger items they might otherwise put off: 78% of consumers see BNPL as a helpful way to make larger purchases.10

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 48% of BNPL users have abandoned a purchase because they didn’t see a buy now, pay later option,11 it’s easy to see why offering BNPL is a smart move.

Help drive sales

When budgets are tight and consumers are stretching their dollar, one of the biggest questions businesses ask is, “Does buy now, pay later increase AOV?” — and the answer is yes. PayPal’s installment option, Pay in 4,12 can increase customer AOV by 10% compared to multiple BNPL competitors’ AOV.13 Letting customers know their options early in the buying process can also help increase buy now, pay later cart totals. Merchants saw an additional 12% lift in sales after six months when adding Pay Later upstream messaging.14

Improve customer experience

Frictionless customer experiences can help your brand stand out when it’s needed most. In one 2022 survey, respondents ranked improving customer experience as their biggest commerce goal in the coming fiscal year.15 Luckily, the BNPL process doesn’t have to be complicated. PayPal has more than 432 million active accounts worldwide. Since these shoppers already have an account with PayPal, the Pay Later approval process is frictionless. Pay Later uses rich historical data and advanced risk modeling to make speedy decisions and keep checkout flowing smoothly. In fact, Pay in 4 has a net promoter score (NPS) of 80.2,16 a good indication of happy customers.

Encourage customer loyalty

Simply offering BNPL can translate into positive brand sentiment: 38% of BNPL users say seeing a BNPL option available online makes them feel positively about that business.17 When customers also have a frictionless, hassle-free experience, they may be even more likely to return again and again: 89% of Pay in 4 spend in the US is from repeat users,18 and a Pay in 4 user will make 35% of their Pay in 4 purchases at the same merchant.19 In a competitive environment, this can be one of the biggest – and perhaps most unexpected – benefits of buy now, pay later for merchants.

Should my business take buy now, pay later payments?

There are pros and cons of buy now pay later for merchants, but this payment method is quickly becoming a must-have for most businesses. It can help your business reach more customers, increase their cart sizes, and keep them coming back, driving incremental growth and revenue even in tough times. For most enterprises, it just makes sense – and dollars.

PayPal Pay Later also addresses one common consideration: fees. Pay Later is automatically included with a PayPal Checkout integration, at no additional cost to you. On your site, your customers may be presented with two options to shop now and pay later – while you get paid up front:

  • Pay in 4: A short-term installment offering that enables customers to pay for purchases in four interest-free payments.
  • Pay Monthly:20 A longer-term payment option that allows customers to pay over 6, 12, or 24 months with no sign-up or late fees.

In unprecedented times, shoppers are demanding greater flexibility in their payment options, and enterprise retailers can help meet those demands with BNPL solutions. If you’re ready to see the benefits of buy now, pay later for merchants, contact sales, talk to your account manager, or call 855-477-5687 today to learn more about PayPal Pay Later.

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