BNPL has been around for decades in a non-digital form – people would pay for goods in installments rather than one upfront payment. Now, when the majority of retailers and merchants have moved online, demand has boomed for BNPL to exist in digital spaces. The pandemic and inflation have driven the call, as customers want the flexibility to pay in small chunks and accommodate restricted cash flow.
But BNPL as a digital experience requires intentional design to ensure that companies create immediate trust with users, and essentially provide a better checkout service than the merchant’s website where they’re located.
These UX insights can help companies finesse their BNPL offering for the long term.
Design facilitates smoother spending
Part of the BNPL boom lies in its customer-centric nature. BNPL is a fintech product, not a bank offering, and so the user experience has been at the heart of its journey. And fintechs (unlike banks) have greater agility to test and iterate to optimize BNPL flows.
A core example of a user-centric, BNPL fintech is Klarna. The post-purchase payments platform hosts 150 million active consumers and more than 450,000 merchants. It’s no surprise then, that Klarna’s domestic market in Sweden has the largest BNPL market share in Europe.
Klarna has been particularly successful in making BNPL visible to customers. The company has a dedicated app, as well as a Chrome extension, and has seamlessly integrated BNPL alongside traditional forms of payment at checkout stages. With a whole marketing campaign positioned around being “smooth”, Klarna concentrates its UX efforts on reducing the perceived time and stress of paying with BNPL.
For example, users have minimum input at checkout, and returning customers can enjoy one-click purchases. Klarna also uses machine learning to personalize users’ preferred payment options based on their purchase history. Referred to as “the smooth marriage”, Klarna uses data insights to streamline its user experience and design as a whole.
New players crystalize UX best practices
As Klarna championed BNPL as a digital solution, other tech players have been quick to develop their own versions. For instance, tech giant Apple now lets customers split the cost of any purchase into four equal payments over six weeks, with no interest or fees to pay. There’s been a B2B BNPL emergence too, with the likes of Berlin-based Mondu and billie helping businesses increase revenue and adopt BNPL solutions to scale faster.
With more BNPL solutions available, trends have emerged in how to best get traction with users. For one, companies should brand their payment terms (e.g. Apple Pay Later) to build a deeper, more recognizable affiliation with users. This brand awareness needs to be expanded across the BNPL widget – companies should use consistent typography, color palettes, and messaging to reassure users from the first touchpoint.
Notably, the handover from the merchant platform to the BNPL process is sensitive, but companies can subtly mirror elements of the merchant site to establish a frictionless switch. BNPL provider, Affirm, does this well by letting merchants promote goods in its app, extending the merchant environment into the BNPL one. Still, BNPL providers have to remember to be transparent to users about the payment being carried out via a third party.
Pay later, in the future
As more people and platforms adopt BNPL, the market will be more competitive and companies will have to differentiate their offering(s). In particular, banks are going to want a piece of the BNPL pie, especially when it comes with high transaction volumes that mean a lot of data and regained access to people who were bank customers before fintech surged.
BNPL has to double down on personalization to retain customers; the more they know about users’ payment preferences, the more value they can deliver around it. For example, providers may want to customize payment strategies based on users’ credit history, preferred brands, and the type of purchase they make. They could equally choose to increase the size of customers’ digital wallets and use BNPL as a mechanism to boost loyalty.
Elsewhere, BNPL will need to cater to other groups as it grows. Currently, BNPL is prominent among Gen Z – 60% say they prefer BNPL to credit cards – but older generations that don’t have access to a credit card are also coming into the fold. UX subsequently needs to be tailored to a potentially less tech-savvy audience, prioritizing logical and accessible design components.
It’s important to note that concerns have also been growing about the ethical responsibility of BNPL. Some critics argue that the payment option encourages people to spend beyond their means and fall into debt. Companies have a duty of care to be open and clear about terms and charges, especially for first-time users in onboarding. Providers like Monzo Flex already use visual aids and cues to communicate when payments are due, and what fees are incurred if payments are late.
Moving forward though, companies will need to curate a more comprehensive, navigable breakdown of user payments, including the number of outstanding loans, total owed amounts, and payments’ status.
There’s a reason why BNPL has had a resurgence in the digital world, it gives users more time to pay for items, and aligns well with the contemporary customer expectation to have choice. And as always, design is critical to maximizing that value.
intive: How We can Help
Bake fair, impactful Buy Now, Pay Later design into your business with intive’s team of experts. We have deep domain capabilities in payments, cross border transactions, wallets, crypto and digital banking. And, our seasoned designers and software engineers design and develop your BNPL products and solutions with the latest innovative technologies.
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