Financing For Electronics Made Easy With Buy Now Pay Later (BNPL)
Technology has become such a pivotal part of our daily lives it’s hard to imagine what we did without our smartphones and laptops. While these innovative bits of technology are practically everywhere we turn and supply is certainly plentiful, they still come with quite a hefty price tag. Keeping up with the latest devices can take its toll on finances, but it’s just something a consumer ‘has got to have’. In this day and age, it is not uncommon to see consumers maxing out their credit cards to get their hands on the latest iPhones. The price and need for these types of devices have turned into a dangerous game that usually leaves the consumer on the losing end. Not only are they racking up debt thanks to interest and additional fees, but they usually wind up paying for these devices long after the next-generation model drops in-store. The goal should not be to bankrupt your customer base, but rather to give them a flexible financing solution that is affordable and doesn’t take years to pay off either. This is where Buy Now, Pay Later electronic financing has the upper hand.
How Does Buy Now Pay Later Electronic Financing Compare To A Credit Card?
You may just be wondering what the difference is between offering your consumers BNPL and credit cards. Yes, they both fall under the financing umbrella, but the difference is that with BNPL, affordability is key.
For example, your customer is looking to purchase the new MacBook Pro. They opt for all the extras like a new mouse, earphones, and charging cable. Once they have added everything to the cart, they are met with a total of around $2,100. They decide to swipe their credit card, which has a limit of $8,000 and already has a balance of $2,400 on it. After checking out, your customer now has a credit card balance of $4,500 and their credit utilization is at 56%!
The problem with this method of payment from the customer’s perspective is that if for any reason an emergency comes up, they might not have the means to cover them. It’s also unlikely that the customer is going to pay off their entire credit card balance in one go, which means they will have high-interest payments in store for them.
Buy Now Pay Later, also known as Point Of Sale financing works a little differently. Instead of swiping a credit card for the same amount, a customer can select the BNPL payment option and apply for electronics financing. Once they check out there is no charge added to their credit card. Instead, the total amount is broken down into affordable payments over 12 months with a very low-interest rate. Some merchants may even offer a 0% APR if the outstanding balance is paid back in full within 6-12 months.
This means their credit utilization isn’t affected, leaving them with more available money in the event of an emergency and they also avoid the 25% APR or more that is usually charged when using a credit card!
The Other Benefits Of Offering BNPL Financing For Electronics
One of the many reasons more and more merchants are offering POS consumer financing is that it helps customers shop and spend responsibly without leaving them with spiraling debt. After all, a customer who can’t afford your products due to their existing debts isn’t going to help your sales either. Plus, when a customer leaves your store penniless after a shop, it can affect the entire shopping experience negatively and they will more than likely not want to return.
Giving your customers more affordable options and flexibility helps to create a positive feeling when they think of your brand. They’ll know where to shop the next time they are looking for a new camera or phone.
Another benefit is that you do not have to handle any of the payment terms either. BNPL platforms like ChargeAfter do the heavy lifting for you. And you as the merchant get the total amount as and when the sale is completed!
ChargeAfter’s technology can also be seamlessly integrated into your existing systems without having to redevelop your entire platform. Chargefter offers Buy Now Pay Later solutions for Magento, Magento 2, Shopify, Woocommerce, Hybris, Big Commerce and more!
The Bottom Line
It’s clear to see why BNPL is making waves in the industry. While both customers using either payment option will get their laptop at the end of the day, the customer who opts for BNPL electronics financing also avoids the many pitfalls of increased credit card debt, inflated interest rates, and will still have enough credit saved on their cards for unforeseen emergency expenses.