Buy now pay later (BNPL) providers have gained popularity in recent years as a way for consumers to make purchases and pay for them at a later date. However, there are several drawbacks to using traditional BNPL providers for businesses.
They Take More Than They Give
One major issue is that traditional BNPL providers take more than they give. When a customer uses another BNPL provider, the chances of that customer making a repeat purchase from your business are reduced. This is because the BNPL provider takes control of the customer and their data, and may even offer it to other brands to drive up their own sales. This can be especially detrimental for smaller businesses that rely on repeat customers.
You Lose Brand Visibility
Another problem with traditional BNPL providers is that they can compromise your brand visibility. Your brand experience doesn't end with the sale, but if your BNPL provider starts advertising to your customers without your knowledge, it can compromise your brand experience. This is especially concerning if your BNPL provider starts promoting competitors' products to your customers.
They Make You Compete Against Big Brands
Using a traditional BNPL provider can also mean that you're building their sales rather than your own. Many of the largest BNPL providers aspire to be shopping "super apps", and may send your customers off to a marketplace app, which can drive them away from your business. This means that you're not only competing against other brands, but also against the budget of the BNPL provider.
Refunds Are Confusing
Refunds can also be a headache with other BNPL providers. It can be difficult to determine who owes whom when it comes to refunds, and the process can be confusing and time-consuming for you and your customer. In contrast, some BNPL providers, such as Gratify, offer transparency and allow businesses to initiate refunds directly from their webstore, making the process significantly easier.
They Are A Marketplace
Traditional BNPL providers send your customers to their marketplace app, where your competitors' products are promoted based on who has the biggest budget. This can be especially frustrating if you're a small or medium-sized business trying to differentiate yourself from the competition.
They Advertise To Your Customers
Finally, BNPL providers can bombard your customers with ads, which can be annoying and distracting. This can lead to a negative brand experience for your customers, who may feel overwhelmed and bombarded with ads from competitors. These ads are almost always from brands your customers haven't used, and they encourage over-spending.
Overall, while traditional BNPL providers may seem like a convenient payment option, they can come with a number of drawbacks for businesses. These include reduced chances of repeat purchases, compromised brand visibility, and increased competition with larger brands. Additionally, refund issues and the risk of customers being exposed to competitors' products can make using a BNPL provider a less appealing option for businesses.
When you're choosing a BNPL provider, look out for these pitfalls. BNPL is proven to increase your sales when you first offer it, but if you want to continue that trend you need to protect your customers, your brand, and your revenue.