What is Buy Now Pay Later (BNPL) & How to Enable it for Your Online Store (2022)

Whether to enable Buy Now Pay Later (BNPL) payment method or not in their online store is a decision every business owner needs to make.

In this post, I’ll help you quicken that decision making process by explaining:

By the way, I’m an eCommerce consultant. If you need help with setting up BNPL for your store, book a call and speak with me here.

How Buy Now Pay Later (BNPL) works

With Buy Now Pay Later (BNPL), customers can choose to pay for a product in 3 or 4 interest-free instalments through a BNPL provider. No credit card required.

For example, if a laptop costs RM1,500, the customer only has to pay RM500 upfront to get it in their hands.

The “interest-free” part of the Buy Now Pay Later (BNPL) is conditional, however. If a buyer delays payment, they’ll be hit with a penalty.

While Buy Now Pay Later (BNPL) is useful for high-ticket items, it can be enabled for products as low as RM10, depending on the provider.

There are two main factors that make Buy Now Pay Later (BNPL) such an attractive payment method for buyers in Malaysia:

  • No credit card required for payments by instalment
  • Lowered upfront payment to acquire goods

No credit card required for payments by instalment

Before the BNPL payment method was an option, Malaysians typically needed to use a credit card to split a payment into instalments.

BNPL payment providers remove this requirement and allow buyer to pay by instalment without a credit card.

Lowered upfront payment to acquire goods

If a pair of shoes cost RM300, a buyer only needs to pay RM100 now to get it shipped to them. This attracts a new segment of buyers who were previously priced out from the purchase.

How Buy Now Pay Later (BNPL) benefits merchants or sellers

Buy Now Pay Later’s benefits merchants or sellers by helping increase in-store conversions. One BNPL provider, Atome reports a conversion rate increase of 17% among merchants partnered with the platform.

In addition to increased sales, merchants or sellers don’t have to worry about customers defaulting payments. This is a risk borne by the BNPL provider.

Cost of Buy Now Pay Later (BNPL) for merchants or sellers

Buy Now Pay Later (BNPL) typically comes with a single cost: A Merchant Discount Rate (MDR) which are charged on sales made through the provider platform. No setup fees are required.

MDRs for Buy Now Pay Later (BNPL) are typically a lot higher than conventional payment methods like Credit Cards or FPX. While Credit Card fees typically cap out at under 5% and FPX under 3%, MDRs for BNPL are typically between 7 – 8%, about 2 – 3 times more.

Merchants or sellers need to weigh the benefits of the increased costs with the increased sales brought in by BNPL.

How to enable Buy Now Pay Later (BNPL) in your online store

Enabling BNPL in an online store involves two steps:

  1. Apply for BNPL account
  2. Integrate BNPL to your online store as a payment gateway

As long as the eCommerce platform is already partnered with a BNPL provider, the steps are fairly straightforward. The BNPL provider can usually help with any technical needs for free.

BNPL providers in Malaysia

Here’s a select list of BNPL providers in Malaysia:

Need help enabling BNPL in your store?

I’m an eCommerce consultant who can help you make the right decisions for your eCommerce store. If you want to get a BNPL cost-benefit analysis done or enable BNPL for your store, book a call with me to get started.

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Lu Wee here, and I am the pen behind Entrepreneur Campfire. I like diving deep into business trends, review business tools and create in-depth tutorials for people just like you.

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