Actually, this payment model has been around for a while: Before the heyday of online shopping, we chose our goods from the catalog, ordered the desired items to our home, and only paid for the articles when the goods arrived by post. Buy now, pay later was the motto then as it is today. However, the term "Buy now, pay later," abbreviated BNPL, entails far more than just purchasing on invoice.

When a customer selects the payment option BNPL, a complex and fully automatic process is initiated in the background. For someone to pay for their goods later, their creditworthiness must first be checked. Within seconds, it is determined whether the buyer is eligible to pay or not. Another difference from the traditional purchase on account is that BNPL often offers installment payments: A new LED widescreen TV for only 100 CHF per month? Convenient!

What are the advantages of Buy now, pay later?

Customers benefit in various ways from "Buy now, pay later": They can, for example, order multiple variants of a shoe type, try them on, and ultimately only pay for the pair that fits. They simply return the rest. Or they treat themselves to a product in the premium segment, whose financing might not be possible at the moment, but is possible in installments. Buying now and paying later means not only more flexibility but also more freedom for the buyer.

For online retailers, the advantages of BNPL lie particularly in customer loyalty. Due to the aspect of trial, the threshold for customers diminishes, they are more likely to complete the purchase process and feel more comfortable at checkout. If an online shop trusts its customers, this trust is evidently reciprocated. Various market studies have shown that the option of BNPL not only increases the volume of the shopping cart but also the number of purchases.

How is Buy now, pay later developing?

In Asia and America, "Buy now, pay later" is experiencing impressive growth, and the demand is also increasing in Europe. In Switzerland, however, there is still room for improvement: In the 2023 Online Retailer Survey by the Institute for Marketing of the ZHAW, only 11 percent of 598 participating online retailers stated that they offer BNPL to their customers. Thus, the proportion has decreased compared to the previous year, when still 17 percent had integrated such a solution in their shop.

According to the survey, it is predominantly online shops with an average-sized shopping cart that offer BNPL. We are talking about a volume of 500 francs or more. Accordingly, installment and invoice purchases seem particularly sensible when an online shop primarily offers high-priced goods, such as furniture, electronics or kitchen appliances, travel, or branded clothing.

Additionally noticeable: If a shop offers BNPL, the payment model becomes increasingly important for its customers. 10 percent of online retailers with a BNPL model stated that installment payments are strongly increasing. In 25 percent, at least a slight growth was recorded. In 29 percent of shops with BNPL, the share of installment payments remained roughly the same, and only 6 percent saw the payment model lose significance. This shows that "Buy now, pay later" is also becoming increasingly popular in Switzerland.

Who bears the emerging risk?

"Buy now, pay later" offers an online shop and its customers not only various advantages but is indeed associated with certain risks. For instance, what happens if the goods are dispatched but never paid for? And with what funds is the gap closed that arises from delayed payment?

When a customer selects the payment option BNPL, they legally receive the ownership rights to the acquired product immediately – regardless of whether they pay the money directly, later, or in installments. This is only possible thanks to a third party, who essentially finances the transaction in advance and transfers the amount to the online shop on behalf of the customer. In a sense, the BNPL service provider grants consumers credit. This company is also responsible for collecting the money from the buyer and ensuring that the amount is actually remitted.

Payment reminders, dunning letters, threat of enforcement actions – all these measures are handled by the third party in the event of a problem. In return, they normally charge a fixed fee on every purchase made via "Buy now, pay later." Thus, the online shop itself faces no financial risk.

Which BNPL providers are there in Switzerland?

In addition to several large, international providers such as Klarna or the MF Group, there are also various companies from Switzerland that specialize in "Buy now, pay later." Two of them are integrated into the Payrexx solution, so you as a retailer can quickly and easily hop on the BNPL bandwagon.

HeidiPay has been active in the Swiss market since 2020, a simple card-based payment solution that focuses on installment payments and allows goods to be paid for within a full 24 months. While the customer can pay over time, the retailer is paid directly by HeidiPay. Depending on the online shop, HeidiPay puts together a different offer, but Payrexx handles the initial contact for you: Simply select as a payment provider and HeidiPay will reach out to you!

The 2023 Online Retailer Survey by the Institute for Marketing of the ZHAW shows that only a few online retailers utilize BNPL. The most popular provider is Klarna.

Recently, the increasingly popular payment system TWINT in Switzerland also offers a "Buy now, pay later" solution. With "TWINT pay later" you offer your customers the opportunity to pay for their purchase up to 30 days later. Here, too, TWINT handles the initial payment and the potential risk. As a Payrexx customer, you can apply for the activation of this BNPL system via form – we will then handle the setup with TWINT for you, so activation is simple and fast.

Thanks to Payrexx, entering the rapidly growing world of BNPL payment becomes child's play. To maintain the trust of your customers, you can also process all payment steps under your own brand presence. Your users feel secure in the familiar environment, and you as a retailer benefit from a trustworthy Payment Service Provider (PSP) that ensures you can offer another payment method – completely without risk, but with maximum flexibility.