Credit extension in the market has been existent since trade and transactions began. From the Indian market perspective, credit occupies an even more important space; it has become very integral for business continuity. Online or e-commerce companies have over the last few years adopted credit strategy for customers albeit in a slightly different format- Cash-on-delivery (COD).
COD in India was pioneered by leading e-commerce player Flipkart as a means to strengthen customer faith in online shopping. The COD concept has no doubt worked wonders for e-commerce portals allowing customers to purchase first and then pay on delivery. This ensured that customers received the product before handing over cash.
But times are changing, in a bid to entice and capture a larger market share online companies are ready to experiment and implement different strategies to lure customers. COD though effective, is slowly giving away its spot to an online credit extension concept known popularly as—Buy now, pay later.
A few ways it enhances shopping and payments experience –
Redefining online shopping experience
For a change, online companies have begun adopting an offline strategy when it comes to payments, that of online credit. A fin-tech innovation, the Buy now, pay later concept has found widespread acceptance from amongst customers and companies. Bolstered by technology, this concept is now made available across many e-commerce portals even as it begins to redefine online shopping experience.
Buy now, pay later concept moves beyond the COD even as it paves way for a more innovative online shopping and payments process. It aims to provide a faster purchase process resulting in an enhanced shopping experience for customers.
Some of the companies that have tied up with Buy now, pay later service providers are – restaurants and cloud kitchens—Fasoo’s, BOX8, FreshMenu, ticket booking and entertainment companies – BookMyShow, PVR Cinemas, manufacturer and suppliers market place—IndiaMart, and fashion retailer —Voonik, to name a few.
Reducing transaction failures
Cart abandonment is a major hurdle that e-commerce companies are finding very difficult to cross, a good number of online shoppers abandon cart for various reasons and payment transaction failure is foremost among those reasons. As per a report, e-commerce companies in India have lost about $4.4 billion in the year 2015 due to cart abandonments.
Transaction failure is a dreaded thing to experience from both online portals and shoppers’ perspective. While the portals lose out on conversions and sales, the shoppers are left helpless and frustrated as their purchase efforts go in vain. Buy now, pay later comes to the rescue of both portals and shoppers as it converts the multi-step payment process into a single tap process resulting in instant purchase and subsequent reduction in transaction failures.
One step payment process
Multi-step payment procedure has for long been a thorn in the flesh for online shoppers, it requires repeated actions and verification process for every purchase. The number of times shoppers need to provide banking details, CVV and OTP numbers to achieve a successful payment transaction process proves too exhausting for shoppers and they would be only too happy to avoid the same.
Buy now, pay later simplifies the complex and multi-step payment process making it easy for shoppers to successfully purchase products with a single tap. All a shopper needs to do is chose the ‘’Buy now, pay later’’ option upon check-out and be rewarded with an instant purchase.
Seamless process leading to enhanced experience
By simplifying the payment process Buy now, pay later brings about an enhanced shopper experience leading to a higher percentage of conversions and successful purchases. Shoppers who undergo a simple and hassle-free purchase process are more likely to be satisfied and delighted with the shopping experience.
Delighted customers are more likely to repeat purchases that can lead to an increasing base of loyal customers resulting in enhanced revenue numbers.
Micro-credit to the rescue
The driving factor behind Buy now, pay later is the micro credit that is provided to shoppers based on certain criteria. In fact, a credit extension to shoppers is what helps them avoid the multi-step process and complete purchase with a single click. Micro-credit also plays a key role in helping shoppers who are short on cash to go ahead with an emergency purchase without the worry of payments. This in fact, has proven very useful as shoppers are allowed anywhere between 14 to 60 days for paying back the amount.
In a highly competitive online market space, e-commerce companies have to find innovative methods to bring in higher number of visitors and convert these visitors to customers. Buy now, pay later with its single tap payment process and micro credit extension has been a rewarding concept as far as e-commerce portals are concerned. While COD ensured trust, Buy now, pay later goes a step beyond—along with trust it also ensures great convenience and a helping hand as far as online credit is concerned.