Boosting Customer Acquisition Through Popular Payment Methods

One straightforward yet powerful strategy to attract and retain clients is to offer the payment methods that shoppers love and expect nowadays.

Buy Now, Pay Later is exactly one of those. Most customers don’t perceive it as nice to have: they expect to see it at checkout and will purposefully choose to buy from brands that have their favourite BNPL provider listed as a payment option.

In this report, we’ll delve into the significance of BNPL as a tool for customer acquisition, exploring its rising popularity and the shifting expectations of consumers in 2024.

We'll uncover how BNPL enhances purchasing power, revolutionises the shopping experience, and caters to the evolving preferences of both younger and older generations.

The report will also examine the strategic importance of selecting the right BNPL provider for your e-commerce business. By choosing a provider that not only improves customer acquisition but also fosters long-term partnerships and brand activations, you can unlock new avenues for growth and success.

Understanding BNPL: Your New Tool for Customer Acquisition

Why is BNPL so loved and why is it a common expectation among customers in 2024?

The BNPL model offers the ideal blend of financial flexibility and accessibility that is currently missing from traditional payment structures. Through our analysis, we have identified three key factors that make BNPL particularly attractive to customers from across the globe and from every age group.

BNPL amplifies purchasing power

BNPL offers customers the opportunity to realise their aspirations without compromise, while enjoying the flexibility to spread out their payments over time, free from the burden of interest rates. This model not only ensures swift access to purchases but also grants ownership from day one, empowering customers to pursue their dreams and making shopping more accessible.

Decline of Credit Cards and the Emergence of Digital and Alternative Payments

In Europe, the shift towards alternative payment methods such as digital wallets, account-to-account and BNPL is on the rise, with 10 out of 14 European countries preferring them as their primary payment method (1).

Traditional payment methods still hold their relevance, but their usage is seeing some serious decline: projections indicate a decrease in the combined share of credit and debit cards in regional e-commerce transactions from 40% in 2022 to 35% by 2026. Similarly, cash on delivery (CoD) is anticipated to represent merely 1% of e-commerce transaction value in Europe by 2026, aligning with the broader decline in cash usage (2).

With all the payment options customers are exposed to today, why shouldn’t they choose what is most convenient and useful for them? When deciding which payment method to adopt, they are looking at all the factors that add ease to their shopping experience.

And among alternative payment methods, BNPL is often cited as a more responsible and transparent way of funding purchases compared to traditional credit.

Gen Z and Millennials, being digitally savvy and adventurous, are at the forefront of this trend, comprising approximately 60% of the working population within the next five years (3). Their inclination towards innovation ensures they continually seek out new opportunities, refusing to settle for less and, in the case of traditional payment methods, for less favorauble conditions. 

BNPL elevates the customer journey through a seamless shopping experience

As consumers' expectations continue to soar, the demand for seamless online experiences is intensifying. Shoppers crave effortless browsing, smooth delivery, and checkout processes that feel like a breeze. 

BNPL contributes to a superior shopping experience in two main ways: 

Firstly, whether users are exploring the homepage or browsing specific product pages, the option to pay with BNPL is readily available, making purchases feel remarkably more accessible and driving conversions.

Secondly, BNPL features faster real-time 'soft' credit checks compared to traditional credit options and an optimised, digitally native user interface tailored to e-commerce. Additionally, BNPL solutions such as Scalapay offer dedicated apps, enabling users to effortlessly manage payments around the clock.

Unsurprisingly, consumers gravitate towards retailers offering their preferred payment options, cementing trust and loyalty.

And merchants embracing those options reap substantial benefits: according to PYMNTS Intelligence, almost 50% of merchants integrating split payments into their business report increased customers as a key benefit, 51.5% report seeing significant uplifts in sales, and 54.8% observe higher customer satisfaction.

According to Juniper Research, there are currently 360 million BNPL users worldwide, with BNPL payments projected to account for nearly a quarter of all global e-commerce transactions by 2026, a significant increase from just 9% in 2021.

Appeal of BNPL Among Younger Consumers and Its Growing Popularity Among Older Generations

BNPL, once synonymous with the Millennial demographic, now casts a wider net, captivating a diverse range of users across age groups.

Younger BNPL users are more likely to be encouraged to use BNPL for a variety of reasons, with budgeting emerging as the primary incentive, and accessibility as second, since BNPL allows immediate credit availability, coupled with minimal scrutiny and little credit history requirements.

Simultaneously, as age advances, the proportion of customers opting for BNPL because of its interest-free transactions increases significantly.

In a survey carried out by RFI (source 2), respondents declared, even when they have the means to afford their purchases immediately, to use BNPL to:

• Better manage their money and expenses (younger generations)
• Convenience
• Little or no cost of using it (older generations)
• Because they trust the provider

It becomes clear how the demand for BNPL has in most cases nothing to do with financial constraints; rather, it is propelled by convenience and flexibility, resonating with individuals seeking hassle-free purchasing experiences, regardless of age.

For merchants, this means that it is becoming essential to listen to customer demands, or risk their dissatisfaction.

PYMNTS Intelligence reports that over 38% of merchants identify missing BNPL payment methods as a top complaint, and 40% note dissatisfaction due to the unavailability of their preferred payment choice at the checkout. Implementing popular loved payment methods can cost you transactions and customers, who will simply decide to shop elsewhere (source 6).

Strategic partnerships for customer acquisition

Without a well-crafted strategy in place, not all split payment providers are able to drive new customers to the merchant website. That is why choosing the right BNPL provider makes all the difference.

A provider that actually improves customer acquisition

Our solution is a source of traffic and visibility via the constant exposure of our brand partners to a thriving community of over 6 million active consumers and nearly 2 million fans across social and email channels. This means we are not only an accelerator for conversions, but also a customer acquisition machine for new brand partners. Over 40% of transaction volume made on our platform comes from Scalapay users that are buying on a new-to-them brand website.

A recognized local leader

Consumers will naturally trust more brands that offer checkout options commonly used in their region. By doing so, you demonstrate a significant commitment to meeting customer preferences and providing a familiar payment experience.

In Southern Europe, Scalapay stands out as the most recognized and beloved BNPL provider among locals, boasting an exceptional 4.8 Trustpilot score. This rating underscores our dedication to delivering exceptional service on a local level, setting us apart from competitors.

Our commitment to customer satisfaction extends to payment acceptance, as we accommodate both prepaid and credit/debit cards. This flexibility caters to the diverse needs of our users, particularly appealing to first-time consumers eager to test our service.

A provider that is more than a payment method, but a long-term partner

When integrating a new provider, it’s crucial to cultivate a long-term collaboration. A partnership with Scalapay extends far beyond the initial integration phase. Once we onboard a new brand partner, we engage in frequent initiatives and campaigns to boost conversions, customer acquisition and retention. 

For instance, a significant number of brand partners are involved in our marketing campaigns during strategic commercial moments of the year, such as sales events, Black Friday, and Christmas, specific occasions such as Valentine’s Day, or trending topics, like sustainability.

The outcomes speak volumes. Through our platform, we consistently observe higher spend per visit and increased acquisition of new customers for our merchants. As a strategic lever for enhancing repeat purchases, Scalapay achieves peaks of over 60% in customer re-engagement, leading to enhanced customer loyalty.

Conclusions

BNPL is not only an enabler of sales growth but it is also a key customer acquisition and retention channel. As e-commerces competes on customer attention, the gateway to growth is often through understanding and embracing the customer's needs and journey. Scalapay’s buy now, pay later solution lights up the path to purchase, making the task of attracting new customers simpler and more effective than ever before.