Make it Big Podcast: Exploring Payment Trends and Buy Now, Pay Later with Sezzle
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Welcome to The Make it Big Podcast, a bi-weekly audio series about all things ecommerce by BigCommerce.
In this episode, we’re diving into buy now, pay later. Listen to Paul Paradis, President of alternative payment platform Sezzle, and Halie Adams, Senior Product Marketing Manager at BigCommerce, explore the latest ecommerce payment trends and how they’re transforming the shopper journey.
Halie Adams: I have my own opinions on why I think it’s really attractive, but I would love to hear from you — what makes BNPL really attractive to online buyers?
Paul Paradis: “First of all, it’s really easy to understand. Instead of a revolving line of credit, which can be really confusing, you know exactly how much to pay and when it’s due for a BNPL service. When you have a credit card with a revolving line of credit, they’re really just trying to get you to pay the minimum, because they make their money when you spread that payment over time, and then charge you interest. They actually make it hard to understand how much to pay and when, — whereas BNPL is the opposite.
“Most of us make the majority of our revenue on the merchant fee side. When people don’t pay us back on time, it actually hurts our profitability. Our incentives are aligned with the consumer. We want you to pay on time.
“It’s also really easy to use. If you’ve ever applied for a store credit card or gone to a bank branch and applied for a credit card, it’s a painful process. You have to fill out a long form. The issuing bank will run a credit check that will take a long time. Your credit score will get dinged. Then you might be approved, whereas BNPL is a super short form online. There’s typically no credit check involved whatsoever, and you get an approval decision in a couple of seconds with a much higher likelihood of getting a yes.”
HA: Over the last couple of years, we’ve been seeing trends like digital wallets and contactless payments and, of course, buy now, pay later. What particular payment trends do you see popping up in the near future?
PP: “I think bank-to-bank payments are going to be really interesting to watch. The credit card networks have been so dominant here in the U.S., and they’ve made payment acceptance very expensive, because there are a lot of middlemen involved within the credit card networks that are each taking a little cut out of every transaction. Companies have been trying to crack bank-to-bank payments for a long time, because it’s so much cheaper than credit card payments.
“There are a lot of countries in the world that have already seen bank-to-bank payments explode, like Germany, India and Brazil. For that to succeed in the U.S., you’ll probably need the government to step in to play some part around regulating and allowing for another type of credit rail to pop up in addition to credit card networks. We also need to improve the speed and security of bank-to-bank payments, because those are two really big stumbling blocks.
“Finally, I believe digital wallets and aggregators are going to be really important over the next few years. Most people love not having to type their payment credentials in for every checkout, so companies like Google, Microsoft and Apple are going to make it much easier to store your preferred payment methods in wallets or in your browser. That’ll gain more influence over what your preferred payment method is, depending on what those aggregators accept you to upload as your preferred payment method.”
HA: At BigCommerce, we’re focused on the entire shopping experience. What impacts do you think payments and checkout have on the larger user experience?
PP: “I think it’s massive. When you look at card abandonment specifically, unexpected shipping cost and price sensitivity are the top two reasons that people don’t complete a checkout. As a merchant, you have to view the user experience as a funnel. Each stage, they go further down the funnel, and you need to prioritize where the majority of your consumers are falling out of the funnel and solve problems to plug that leak.
“Payments.com publishes a Checkout Conversion Index every year, and the number of payment methods you accept is directly correlated to conversion increase. There does come a point where your returns diminish, but you don’t want to lose a customer because you don’t accept the form of payment that they like to use. As a merchant, I would make sure that you offer, at minimum, all the most popular checkout options, and find all the different ways people like to pay: credit card, debit card, installments, wallets, crypto. Whatever it is, be up-to-date on the trends of what payment methods are being used, and make sure you’re offering at least one flavor of all of them.”