Actually, this payment model has been around for a while: Before the heyday of online trading, we picked our goods from the catalog, ordered what we wanted to our homes and didn't pay for the items until the goods arrived by mail. Buy now, pay later was the motto then as it is today. However, the concept "Buy now, pay later", abbreviated BNPL, encompasses far more than just buying on an invoice.

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

What advantages does Buy now, pay later offer?

Customers benefit in various ways from "Buy now, pay later": For example, they can order several variants of a shoe type, try them on, and ultimately pay only for the pair that fits. They simply send the rest back. Or they can indulge in a high-end product that would not be financially possible at the moment but can be in installments. So now buying and later paying means not only more flexibility but also more freedom for the buyer.

For online merchants, the advantages of BNPL lie particularly in customer retention. Through the aspect of trying out, the inhibition threshold of customers decreases; they are more likely to complete the purchase process and feel more comfortable during checkout. If an online shop trusts its customers, this trust is demonstrably reciprocated. Various market studies have shown that the BNPL option not only increases the basket volume, 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 demand is also increasing in Europe. However, here in Switzerland, there is still a lot of room for improvement: In the Online Retailer Survey 2023 from the Institute for Marketing ZHAW, only 11 percent of 598 participating online merchants stated that they offer BNPL to their customers. This means the proportion decreased compared to the previous year when 17 percent had integrated such a solution into their shop.

According to the survey, it is mainly online shops with an average large shopping cart that offer BNPL. We're talking about a volume of 500 francs or more. Accordingly, installment and invoice purchases seem to be particularly useful 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 merchants with a BNPL model stated that installment payments are increasing significantly. 25 percent saw at least slight growth. At 29 percent of shops with BNPL, the proportion of installment payments remained about the same and only 6 percent saw the payment model losing significance. This shows that "Buy now, pay later" is becoming more popular in Switzerland as well.

Who bears the emerging risk?

"Buy now, pay later" offers an online shop and its customers not only various advantages but also comes with certain risks. What, for example, if the goods are shipped but never paid for? And with what money is the gap closed that arises from delayed payment?

If a customer selects the payment option BNPL, they legally obtain ownership of the acquired product immediately – whether they pay the money directly, later, or in installments. This is only possible thanks to a Proveedor externo, which essentially pre-finances the transaction and transfers the amount to the online shop on behalf of the customer. In a way, the BNPL service provider grants the end consumers a loan. This company is also responsible for collecting the money from the buyer and ensuring the amount is actually transferred.

Payment reminders, warnings, threats of enforcement – in an emergency, all these measures are taken over by the Proveedor externo. As compensation, he usually charges a fixed fee on each purchase made via "Buy now, pay later". For the online shop itself, thus, no financial risk arises.

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 Comerciante can quickly and easily jump on the BNPL train.

Since 2020, HeidiPay has been active in the Swiss market, a simple card-based payment solution that focuses on installment payments and enables payments of the goods over an entire 24 months. While customers can pay over time, the Comerciante is paid directly by HeidiPay. Depending on the online shop, HeidiPay puts together a different offer, but Payrexx takes the initial contact for you: Simply select as a payment provider and HeidiPay will contact you!

The Online Retailer Survey 2023 from the Institute for Marketing ZHAW shows that few online merchants use BNPL. The most popular provider is Klarna.

Also recently, the increasingly popular payment system TWINT in Switzerland offers a "Buy now, pay later" solution. With "TWINT Pay Later" you offer your customers the option to pay for the purchased goods up to 30 days later. Here too, TWINT takes over the initial payment and the possible risk. As a Payrexx client, you can apply for the activation of this BNPL system via a form – we will then handle the setup with TWINT for you, so activation is simple and quick.

Thanks to Payrexx, getting started in the fast-growing world of BNPL payment becomes a breeze. To not diminish the trust of your customers, you can also process all payment steps under your own brand. Your users feel safe in their familiar environment and you as a Comerciante benefit from a trustworthy Payment Service Provider (PSP), ensuring that you can offer another payment method – completely without risk and with maximum flexibility.