TRANSCRIPT

Hi everyone, my name is Carl Moon and I’m the Director of Communications at P3 Media.

Over the last few years, we’ve seen a rapid rise in the popularity of buy-now-pay-later platforms such as QuadPay, AfterPay, and Affirm.

These tools are great for raising your conversion rates because they enable your customers to pay for their purchases in installments.

That’s why one of the questions we hear most often from our clients is “which BNPL solution is the best for my store?.”

Our answer almost every single time is: it depends on your core product and your core audience.

You see, there are two basic types of BNPL tool—easy financing options like Affirm and Bread, and convenient pay-in-4 options like Quadpay, Afterpay, and Klarna. 

First let’s look at how financing platforms work.

Financing tools lower the barrier to making large purchases by allowing your customers to quickly secure a short-term loan right from checkout. Financing through a BNPL tool usually involves a brief application process and credit check, with approved customers selecting their ideal repayment window, and agreeing to be charged a specific interest rate corresponding with a repayment window of up to 24 months.

Financing tools work best to break up the cost of big-ticket items because they offer your customers a simple way to spread repayment over as many as 18 months. If your core product offerings cost over $2,000 each (or if your average order value is over $2,000) you'll almost certainly want to add a financing option like Affirm to your checkout experience, since most pay-in-4 options don’t cover orders exceeding $2000, and some won’t cover orders totaling over $1600.

Speaking of which, now let’s look at Pay-in-4 Platforms.

Unlike the financing platforms we just covered, Pay-in-4 tools offer an interest-free way for your customers to spread the cost of a purchase evenly over a short, set period– usually around 6 weeks.

Additionally, Most pay-in-4 platforms either don’t perform credit checks, like Afterpay, or perform soft checks that won’t affect your customers’ scores, like QuadPay. 

Pay-in-4 options are used most by younger and credit averse shoppers. That’s a major reason to add one to your checkout, even if you think that your products are already affordable enough. 

After all, when selling to Millennial and Gen Z customers, there’s no such thing as making your products too easy to buy. Plus, the ability to split payments will actually encourage many of your customers to buy more items every time they shop, raising your AOV and gross revenue.

If you’re still not sure whether a financing or pay-in-4 tool is right for you, consider that in many cases, it can be advantageous for you to offer both.

In this example, our client offers two different BNPL options during checkout: financing through Bread, and pay-in-4 via QuadPay.

Over the last 90 days, both options have been utilized equally.

More importantly, cart conversions among customers choosing financing or pay-in-4 are around 10X higher than they are among customers who go through the traditional checkout experience. That’s how incredibly effective these BNPL options can be at encouraging conversions.

If you already know that pay-in-4 is likely to work best for your product and audience, consider offering more than one pay-in-4 option at checkout. Many customers prefer the pay-in-4 provider they’re already signed up with, and there’s no reason to miss out on a sale by limiting your customers to a single option.

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