Want to Skyrocket Your eCommerce? BNPL is the Solution You’ve Been Waiting For!
Imagine being able to offer your customers more than just great products. Picture a boost in their purchasing power without any upfront costs. That’s exactly what BNPL does. In the Middle East, where digital shopping is growing exponentially and is expected to reach $50 billion in market volume by 2025, BNPL is an unbeatable growth tool.
The BNPL payment options increase the likelihood of conversion rates by 30% and grow order values by up to 50%—and customers love the freedom it brings. ~Source.
Adding BNPL to your eCommerce app isn’t some passing trend. In fact, about 62% of Millennials and Gen Z consumers now prefer to use BNPL over credit cards, especially for online purchases. It’s a proven driver of sales, lifting conversion rates. Today’s shopper wants flexibility, and this desire for flexibility in payments will be heightened in the UAE and Saudi Arabia by mobile-first consumers who seek seamless, budget-friendly ways to pay.
Ready to make BNPL work for your eCommerce business? Let’s explore with precision how it works and why BNPL for eCommerce apps is crucial to drive growth throughout the Middle East.
What is Buy Now Pay Later (BNPL)?
Buy Now, Pay Later is taking the eCommerce world into the future. Think of a customer who locates something he just has to have but would like to manage the payments over time. That’s just where BNPL shines: it is a trendy, flexible payment method that allows shoppers to have the goods they purchase today and pay in manageable installments-interest-free in most cases. This payment option is taking over the world of eCommerce, especially in regions such as the Middle East, where digital payments and eCommerce are on a massive rise.
Dive into the BNPL business model to learn more about its work in detail!
BNPL is more than just another way to pay. It lifts conversion rates by about 30%, with customers through to complete purchases they might otherwise abandon. BNPL has rebranded shopping as more affordable, starting with providers like Klarna and Afterpay. Take Klarna’s “Pay in 4” plan, for instance, a common feature throughout online stores that splits costs into four installments and easily helps shoppers break down costs into several weeks.
How does Buy Now Pay Later Work in eCommerce Apps?
Incorporating BNPL into an eCommerce app makes the customer checkout experience seamless, fast, and flexible. Here’s how BNPL for eCommerce apps works, step-by-step:
Customer Chooses BNPL
At checkout, the customer selects a “Buy Now, Pay Later” option integrated into the shopping app like Klarna, Afterpay, or your custom-made.
Eligibility Check (If Needed)
Some providers quickly verify eligibility through a soft credit check, though others skip this to simplify the process. Such a check doesn’t impact credit scores.
Initial Payment
Typically, the customer makes a small initial payment, usually 25% of the purchase. At this step, the app confirms the purchase while giving customers more time to pay off the balance.
The BNPL Provider Pays the Retailer Upfront
Here’s where it benefits retailers: the provider pays you, the retailer, upfront (minus a small fee). So, you get your revenue almost instantly, without waiting for the customer’s full payment.
Customer Repays in Installments
After receiving their item, the customer pays the BNPL provider in set installments. For example, if a shopper used Klarna, they might pay off the remaining balance every two weeks.
Increased Sales and Loyalty for Retailers
By offering BNPL, eCommerce apps see not only higher conversions but also increased average order value. In some cases, customers spend 50% more when BNPL is available.
Get your hands on the ultimate eCommerce app development guide!
Why do customers prefer BNPL for online shopping?
Consumers today need flexibility, affordability, and control, and Buy Now, Pay Later (BNPL) ticks all these boxes. BNPL in eCommerce apps is a game-changer, as it allows customers to pay over some time, usually interest-free, and thus makes larger purchases more straightforward to manage. Below is the reason why it has become one of the most sought-after forms of payment, especially across regions like the Middle East, where eCommerce is booming in its own right:
No Interest, More Control
Most BNPL services charge no interest if payments are made on time. Compared to credit cards, consumers are a big winner due to the zero interest and no high-interest charges for their financial stability and avoidance of high-interest fee payments. Almost 60% of users say they favor BNPL over credit cards on these lower costs.
Instant Approvals, Flexible Terms
Compared to traditional credit, BNPL services often avoid using credit checks or approvals to be more accessible for young consumers to shop through. Some apps offering BNPL, like Klarna and Afterpay, give customers various options, from paying over a couple of weeks to several months before payment. They get enough time to plan their money without the frustration of credit approval, which is critical in sectors such as the fast-paced world of electronics and clothing in eCommerce.
Less Cart Abandonment
BNPL promotes more conversions since it eliminates the “sticker shock” or when the price is too overwhelming at checkout. It allows users to make purchases without paying the total amount upfront. Research shows that BNPL can boost conversion rates by up to 30% since customers are more comfortable making a more significant purchase, knowing they do not have to pay for everything at once.
Increased Spending Power
BNPL for the shopping apps pushes more individuals to spend more. Thus, this option allows customers to purchase either by buying other products than intended or upgrade them to different high-level products. Therefore, transaction sizes increased, reportedly up to 50%, for a particular retailer following BNPL implementation in some clients’ accounts.
Financial autonomy and elasticity
BNPL is especially popular among young consumers and best caters to the desire for flexibility in financial transactions without a long-term commitment. BNPL is also crucial in countries with low adoption of credit card services, like parts of the Middle East, where consumers shop and pay on their terms.
Including BNPL in your eCommerce application addresses this growing demand. Beyond that, BNPL applications allow you to tap into a broader customer base and are considered to drive loyalty for potential sales. These rewards justify why Buy Now Pay Later for eCommerce is always worth investing in, an undertaking consistent with modern consumer behavior.
Benefits of Buy Now Pay Later for eCommerce businesses!
Introducing Buy Now, Pay Later (BNPL) to your eCommerce app can be transformative. Here is why more eCommerce businesses add BNPL as a payment option and get much gain:
Increased conversion rates
BNPL options reduce the initial financial burden, thus making fewer cart abandonment cases and more completed sales. Studies show that BNPL can drive conversion rates by up to 30% as consumers feel comfortable proceeding with purchases they’d otherwise be hesitant to do so.
AOV is increased
BNPL encourages customers to consider more significant purchases or put more items in their carts. BNPL users spend up to 87% more per transaction, meaning that the eCommerce sites take home more revenue per transaction.
Ease of Cash Flow and Reduction of Risk
With BNPL, the business gets the full amount of payments upfront, even though customer payments are spread over time. This means constant cash flow and transfers the non-payment risk to the BNPL provider, saving a business from the hassle of managing collections.
New and Loyal Customers
BNPL is a massive draw for businesses seeking to access the Millennials and Gen Z market: these two generations increasingly prefer flexible, cashless payments. Providing BNPL offers an option that fits the modern mobile-first, convenience-seeking buyer. The more involved this customer is, the more likely she will make repeat purchases and remain loyal over time.
Less Cart Abandonment Instances
Price is the leading cause of cart abandonment. BNPL can help alleviate this with broken-up payments, making the purchasing process less intimidating and more manageable. Payment flexibility can help reduce abandonment rates by significant margins, compelling customers to complete purchases that would otherwise be met with sticker shock from a single full upfront payment.
It is not only in line with the behavior of today’s consumer but also drives measurable business outcomes. For those who are considering BNPL app development or integrating BNPL into eCommerce apps, these benefits illustrate why it’s a powerful tool for growth in today’s competitive eCommerce landscape.
Top Brands Using BNPL in their eCommerce Apps
Let us now discuss the top eCommerce applications in the Middle East that have integrated Buy Now, Pay Later (BNPL) and see how this enhances its product line and brings crucial growth.
Noon
Noon happens to be one of the chief eCommerce applications in the Middle East. The application will display several products ranging from electronics to fashion.
Noon, for instance, has partnered with BNPL providers like Tabby to provide flexible payment to customers who can split pay into interest-free installments. This integration has increased customer engagement and better average order values because shopaholics are more disposed to spending more with bite-sized payments.
Namshi
Namshi is one of the most popular fashion online retail stores in the Middle East. It offers a selection of clothing and accessories.
Namshi collaborated with Tabby to introduce BNPL services, which allow customers to pay for their purchases in installments without any interest charges. BNPL has increased sales and fewer cart abandonment rates as customers get the required flexibility.
Read Also: How to Create a Shopping App like Namshi?
Amazon.ae
Being a global player, Amazon has a presence in the Middle East through its subsidiary, Amazon.ae. This strategy has helped it serve the various needs of its customers.
Amazon.ae has also facilitated BNPL options, such as monthly payment plans, to provide much-needed payment flexibility. The BNPL initiative helps enhance customer loyalty and make shoppers purchase frequently; customers can easily manage their expenses.
Xcite
Xcite is Kuwait’s leading eCommerce site offering all kinds of electronics, appliances, and much more.
Xcite has collaborated with BNPL providers to include options for shoppers to pay by installment, which has maximized the shopping experience of its customers. Overall conversion rates and average order values have improved since BNPL integration, as shoppers are now more willing to spend more on a single purchase when such flexibility in payment is given.
What can you do to introduce BNPL in your shopping app?
To introduce BNPL in your shopping app, you can either build your own BNPL solution or integrate an existing one. Each approach has unique benefits depending on your business goals and resources. Here’s a quick guide on both options:
Building Your Own BNPL Solution
Building your BNPL from scratch gives you all the room to customize and brand everything, improving user experience and brand loyalty. However, it also calls for greater investment in development, security, and compliance.
- All Branding Control: Developing a BNPL allows you to control each detail, from how payments are made to what the interface would look like. This degree of freedom can align the BNPL experience with the brand.
- Ownership: A proprietary BNPL possesses valuable customer data. It is an asset because it can effectively market tailored products for consumers with greater customer insight and far more effective loyalty programs.
- Customization: Customize payment plans according to your targeted customers, such as interest-free monthly payments or discounted prices based on customer loyalty.
- Compliance and Risk: Complex compliance and security regulations- Anti-Money Laundering (AML) and Know Your Customer (KYC) processes, along with continuous fraud protection planning, must be addressed. You will also require advice from a reputed eCommerce app development company regarding regulatory compliance.
Building a BNPL is time- and investment-consuming, depending on the feature set it is built for, starting from $50,000 to $250,000 for real-time credit assessment, fraud prevention systems, etc.
The benefits are substantial: higher customer loyalty, data ownership, and positioning against the competition.
Integrating an Existing BNPL Solution
Alternatively, integrating an established BNPL provider (like Klarna, Afterpay, or regional options like Tabby and Tamara) is faster and often less costly upfront.
- Quick Setup: These providers offer ready-made APIs that integrate directly into your app. This means less development time, allowing you to implement BNPL swiftly and start attracting new customers.
- Managed Risk and Compliance: Established providers handle credit risks and regulatory compliance, freeing you to focus on core business operations without worrying about collections or defaults.
- Minimal Development Cost: Integration is more affordable than building from scratch. The provider typically charges transaction fees but covers data security, compliance, and maintenance.
Integrating an existing solution also provides flexibility but may not offer the same data control or branding opportunities as a custom-built BNPL.
In Summary: Building your own BNPL solution offers deep customization and data ownership, making it ideal for businesses seeking a long-term, tailored approach. Meanwhile, integrating an existing BNPL provider allows for faster, simpler implementation. Both paths can significantly enhance your eCommerce app’s appeal, improve conversion rates, and increase average order values, making BNPL a smart addition to your app.
Build a BNPL solution for eCommerce with Kody Technolab Ltd
Buy Now, Pay Later has transformed the world of eCommerce by providing the freedom to shop for customers without paying a penny at the outset. Seeing the increasing adoption in the Middle East, it becomes clear that BNPL lets customers make more sales at lower cart abandonment rates. Businesses offering BNPL achieve higher conversions and allow customers to spend more on an order. BNPL is the new trend after online payment, which also changed the customer journey by transforming the eCommerce app.
At times, progressively increasing BNPL users makes it even more necessary for the competing brand to attract the few digital-first shoppers. The questions and answers are: How do we stand out in an ever-growing world with BNPL in our eCommerce apps?
Partnering with Kody Technolab Ltd. will allow your eCommerce brands to control the experience with a custom BNPL solution fully. We offer features such as customizable payment plans, data-driven insights into customers’ behavior, and compliance with existing security standards. Our range of end-to-end developments encompasses everything from seamless integrations and testing to real-time analytics and support.
With the help of Kody Technolab, your business can realize the full potential of BNPL to boost customer loyalty and maximize sales in today’s fast-evolving eCommerce market.
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