What: A new payment method with increasingly growing important.

Why it is important: BNPL scheme are a strong lever to increase the average basket value.

The penetration of digital capabilities into payment methods, coupled with customers eager to have flexibility in their cash management, explains the rise of Buy Now, Pay Later solutions, according to WWD. The article argues that BNPL schemes allow customers to increase the value of their basket, either by complementing their purchase (with an item that they would not have afforded to buy otherwise) or the will to consume less, but better (assuming that quality is correlated to price tag value). It is also a way for pandemic-hit customers to keep on buying in spite of a temporary difficult situation. Transparency and seamless integration in the buying journey are also cited as key drivers for this solution to grow.

IADS note: interestingly, this type of solution has been developed initially in countries where the economic situation forced retailers to find creative solutions to fuel consumption, such as Mexico, where El Palacio de Hierro already has quite an expertise on this topic.

The Growing Allure of Buy Now, Pay Later