The ability to ‘buy now, pay later’, or BNPL, has revolutionised the way that people shop. Simplifying the checkout experience and providing convenience for customers, shoppers are able to organise payments in ways that work for them.
Modern Retail spoke with Alex Naughton, Head of Klarna UK & Ireland about buy now, pay later, asking retailers’ most common BNPL questions.
1. How can retailers benefit from offering Klarna?
In a competitive and shifting retail landscape, retailers need to adopt strategies, such as offering buy now pay later, that help them improve their customer experience and meet increased consumers’ expectations.
According to a Bain research on the BNPL sector, almost 60% of retailers offering BNPL saw improved conversion as many online shoppers value BNPL’s affordability and flexibility and are therefore less likely to abandon their baskets, while over half (53%) were able to expose their brands to new customers. Other benefits reported by retailers include: increase in average order value (47%), improved customer loyalty (38%) and increased customer satisfaction (38%).
Indeed, Klarna allows retailers – big and small – to access a wide community of global consumers (90 million consumers worldwide) and provides them with a variety of advertising and marketing tools to make their online shopping experience more engaging and personalized, helping them attract and retain customers.
What’s more, in a recent survey among over 30,000 Klarna customers, 70% said they decided not to buy from a store because Klarna was not available at checkout.
2. How do shoppers benefit from Klarna?
We are seeing a global shift with consumers increasingly turning away from high cost credit cards and choosing flexible and better value payment methods like buy now, pay later.
Klarna is a more consumer friendly and sustainable way to access credit. Unlike credit card providers, who intentionally keep people in debt with minimum payments and high interest rates, our BNPL products are interest and fee free and are designed to keep people out of debt with clear upfront payment plans. By using BNPL instead of credit cards, UK consumers saved £76 million in interest charges alone last year.
3. How important has ‘buy now, pay later’ become in the retail industry?
The BNPL sector is growing rapidly. According to a Bain research, BNPL volumes are expected to increase 29% annually and reach 10% of all e-commerce spending by 2024.
We expect BNPL to play an increasingly important role in the retail industry as online shopping continues to grow in popularity and consumers move away from credit cards and look for better value and flexible payment options.
At Klarna we now count over 15 million total consumers and over 17,000 retailers in the UK and we are increasingly seeing Klarna become the payment method of choice.
4. Tell us more about the Klarna app
We want to give people the best shopping experience possible, by bringing convenience and value to the forefront of the shopping journey. The Klarna app offers a range of features covering the entire shopping journey. In the app, customers can postpone a payment, manage returns, check the carbon footprint of their purchases, explore exclusive deals and personalised shopping collections, re-engage with the brands they love as well as discover new brands and products.
Most recently we launched our new shopping app, which includes a shopping browser with a variety of solutions and features that makes shopping easier and more enjoyable, including the possibility to pay with interest-free flexible payments at all online retailers, regardless of whether they’re partnered with Klarna or not.
5. Does Klarna cost retailers? How do retailers get started with Klarna?
Klarna is easy to integrate and set up. Merchants can get up and running on popular platforms from Shopify to Magento, and PSPs such as Adyen and Stripe. Klarna is available via almost every e-commerce platform and payment service provider – and in many cases can be up and running within hours.
Klarna pays the retailer immediately and takes on all the merchant risk, so that the retailer will never lose out if a consumer’s payments are delayed or unpaid for any reason. Klarna charges a transaction fee, like any other payment method.
For merchants, Klarna can also provide a full online checkout which enables straightforward and immediate payment with a range of payment options, including credit and debit cards, Klarna payment methods and or, alternative payment methods.
When to get started with ‘buy now pay later’
With Christmas rapidly approaching and peak season in full swing, now is the perfect time to set up buy now, pay later. Providing convenient payment options for customers and boosting retail sales and conversions, this effective addition can be set up quickly and easily.