Navigating Buy Now Pay Later in Resale

* This is not legal or financial advice. 

Buy Now Pay Later (BNPL) is an increasingly popular payment option in retail and resale. As the name suggests, it allows customers to purchase goods or services and defer payment until a later date. 

Picture this: you're eyeing an expensive new handbag, but you're running low on money until your next paycheck. Enter BNPL, which allows you to walk away with the handbag today and pay for it later, often in installments with interest. BNPL lets you impulse-buy without immediately feeling the sting in your bank account.

As you can imagine, BNPL has pros and cons for both the consumer and the store owner.

Buy Now Pay Later for Resale Customers

From the consumer's perspective, BNPL offers a convenient way to purchase high-value items without having to pay upfront. This can be especially useful for people on a tight budget. With BNPL, customers can spread the cost of their purchase over several months, making it easier to manage their finances.

However, there are also some potential downsides to BNPL. For consumers, the main risk is that they may end up paying more than they intended. BNPL providers often charge higher interest rates than traditional credit cards, and if customers miss a payment, they may be hit with additional fees and charges.

How BNPL Can Boost Sales for Resale Stores

For store owners, BNPL can be a useful tool for increasing sales. Consignment stores can attract customers who might not have been able to purchase high-value items without this payment option. This can lead to an increase in sales and revenue for the store. 

Other benefits include: 

• Improved Conversion Rates: BNPL can help reduce cart abandonment rates at checkout. Customers who may have abandoned their carts due to price concerns or budget constraints may be more likely to complete their purchase when presented with BNPL as a payment option.
• Competitive Advantage: In a competitive resale landscape, offering BNPL can differentiate a store from its competitors and attract customers looking for flexible payment options.
• Enhanced Customer Loyalty: By offering a convenient and flexible payment option, stores can strengthen customer relationships and encourage repeat purchases. Positive experiences with BNPL may also lead to word-of-mouth referrals and positive reviews.

The main risk for BNPL for store owners is that they may not receive payment for the items they sell. BNPL providers often take a percentage of the sale price as a commission, and if the customer defaults on their payments, the store owner may be left with unsold merchandise and no way to recoup their losses.

Some other risks include: 

• Fraudulent Transactions: BNPL services may attract fraudulent transactions, as some customers may attempt to exploit the deferred payment feature.
• Cash Flow Disruption: While BNPL can boost sales by making purchases more affordable for customers, it can also disrupt cash flow for the store owner. If a significant portion of sales are made through BNPL, the delay in receiving full payment may impact the store's ability to cover operational expenses or invest in inventory replenishment.

Mitigate BNPL Risks

Despite the risks mentioned above, BNPL is still a popular payment method. To make the most of this payment option, both consumers and store owners need to be aware of the risks and take steps to mitigate them.

For consumers, this means carefully considering whether they can afford to make the monthly payments before they sign up for BNPL. They should also ensure that they understand the agreement's terms and conditions, including the interest rate, fees, and any penalties for missed payments.

For store owners, this means choosing a reputable BNPL provider. It's important to have clear policies in place for handling accounts, including steps for collecting payments and clearly outlining your terms and conditions. Provide transparent information about interest rates, repayment schedules, late fees, and any other relevant details to help customers make informed decisions and avoid misunderstandings. Resale store owners can also implement fraud prevention measures to detect and prevent fraudulent transactions, such as implementing additional verification steps.

5 BNPL Providers for Resale Owners

The best Buy Now, Pay Later (BNPL) service for your resale store can depend on various factors such as fees, terms, and flexibility. There are several common BNPL providers to choose from… 

1. Sezzle: Sezzle enables shoppers to split their purchase into four interest-free payments over six weeks, with the first payment due at the time of sale.
2. Afterpay: Many online and physical resale stores accept Afterpay.  Splitting payments into four installments over six weeks is offered, with no interest charged as long as payments are made on time.
3. Klarna: Klarna is another popular BNPL service known for its smooth checkout process and various payment options, including installment plans.
4. Affirm: Affirm allows customers to split their payments into fixed monthly installments over a specified period, with interest rates ranging from 0% to 30% APR based on creditworthiness.
5. PayPal Pay in 4: PayPal's BNPL offering, Pay in 4, allows customers to split their purchases into four equal payments over six weeks, with no interest charged. It integrates seamlessly with PayPal accounts.
   
   

Types of Resale Stores that Could find BNPL Valuable

Several types of secondhand stores might find value in offering BNPL options to their customers. Here are a few examples:

1. Consignment Shops: Filled with pre-loved goodies waiting for a new home, BNPL could be the cherry on top, making it even easier for shoppers to say "yes."
2. Antique Stores: For those who love a bit of history and character in their decor, BNPL could be the key to unlocking those hidden gems without breaking the bank.
3. Vintage Boutiques: Think thrift shops where you can score one-of-a-kind finds. Customers often shop for clothing as a discretionary purchase, and offering BNPL can make higher-priced items more accessible.
4. Furniture Resellers: Furniture and home decor purchases can be significant investments, and providing flexible payment options can help customers afford larger or more expensive pieces.
5. Electronics Resale Stores: Think resale shops selling refurbished electronics, such as laptops or gaming consoles. These items often come with higher price tags, and BNPL can make them more accessible to a broader range of customers.
6. Online Marketplaces: From vintage clothing to collectibles, online consignment shops and other resale platforms are the virtual playgrounds for bargain hunters. Introducing BNPL could be a game-changer, enticing even more shoppers to click "add to cart."

Resale stores can increase sales and attract a broader range of shoppers by offering customers flexibility in payment. However, each store must evaluate its specific needs and assess the feasibility of integrating BNPL services into its business model and software systems.