3 PAYMENT METHOD SCORECARD: BUY NOW PAY LATER
Cost
integration. 860 861 As with other payment methods, processor plug-ins many prove to be more expensive for merchants over time. Consumer/Bank Costs Rewards Some BNPL providers have attempted to offer consumers rewards in the past, but they have not been successful. 862 Interest Payment on Debt BNPL began by offering no interest installments, however, providers like Affirm and Klarna have branched out to offer longer term financing with interest ranging from 0 to 36%. (See BNPL Global Overview for more information.) Surcharging Surcharging is not typically seen for BNPL users.
Metrics
Weight Score
Average Fee Level
15% 1.0 10% 4.0
Competitive Leverage
Competition within Payment Method
15% 2.0
Fixed Cost Rewards
10% 3.0 15% 1.0 15% 1.0 20% 5.0
Interest Payment on Debt
Surcharging TOTAL SCORE
2.3
Merchant Costs Average Fee Level According to CMSPI’s Cost of Payments Analysis,
BNPL average cost is 2.77%. Competitive Leverage
Some markets, like Sweden and Australia, have seen BNPL be successful and merchants may feel the pressure to offer BNPL as an option to remain competitive. The pressure to accept may also be depending on the vertical the merchant is in, e.g. users are more likely to use BNPL for apparel versus dining out. Overall, BNPL remains fairly niche and growth has stalled, remaining around 5% of global eCommerce spend from 2022-2024 according to the Worldpay Global Payments Report. Competition within Payment Method The merchant’s only choice for competition within BNPLs is deciding which providers to offer. Once the consumer uses an accepted BNPL provider, the merchant does not have any option but to incur the fees negotiated with the provider. Fixed Costs Buy Now, Pay Later providers usually integrate with POS systems and online platforms through APIs. Some payment processors provide plug-ins for select BNPL providers whereby a merchant using the processor would be able to switch on the BNPL provider without having to create a unique
198
Powered by FlippingBook