Buy Now, Pay Later (BNPL) allows customers to buy something online, but pay for it after delivery. A BNPL payment can be made in installments over a period of time or as a full payment at a fixed date. Thus, the payment method is a novel variant of purchase on account, for short-term financing of goods.
No traditional banking institutions have to be involved when paying in BNPL installments. What’s more, some BNPL companies even refrain from charging interest rates – a practice that banks still adhere to.
With the economic downturn threatening the margins of online fashion retailers, Buy Now, Pay Later can be a tool to keep customers happy in spending.
In this article, we will have a look at the how and why. We will cover…
Why the fashion industry is under pressure and how BNPL can help
What the core advantages of Buy Now, Pay Later are
What options you have when trying to get a Buy Now, Pay Later solution for your platform
Returns and refunds are a major concern for retailers. One important factor is cost. In 2021 alone, the combined value of all returns in the U.S. was $761 billion. What’s more, The fees that merchants have to pay to payment providers for refunds to the original source of payment add to this amount. Building their own e-wallet-based payment system can reduce these costs while improving the customer experience. But how to build an efficient refund processing for e-commerce platforms – that’s what we want to answer in this article.
In the following paragraphs, we will take a look at:
The difference between returns and refunds
The typical flow of a refund in online retail
The challenges of refunding payments
The advantages of an e-wallet system for refunding
Buy Now, Pay Later (also: BNPL) is shaking up the payment market. In 2020, it already made up 5% of annual e-commerce transactions, according to Bain & Company. And the trend is upward, as many online retailers plan to introduce BNPL payment options, as well. The key question for those companies is:
What is the best way to set up a payment system that includes BNPL options?
This boils down to the simple choice between turnkey payment systems by 3rd parties or a custom system built and run in-house.
The first option is quicker and doesn’t require as much domain knowledge and development resources as the second one. However, it comes with disadvantages in the long run such as:
Continuous fees that cut into revenue
Dependency on a third party regarding updates and features
Risk of so-called vendor lock-in, when the BNPL provider cannot deliver the service or changes the price structure, while no alternative provider is available
Possibility that the BNPL solution in question no longer fits the retailers’ business strategy as it evolves
When building a custom payment system with Buy Now, Pay Later options, these problems can be avoided or mitigated. Companies are even better positioned with an e-wallet system, as BNPL processes can also be built on top of it.
In this article, we provide an overview of how companies can build their own BNPL solution – and why this is even easier with a powerful e-wallet framework.
We don’t choose our favorite football club – it chooses us. The same is true for our preferred payment method. Worldwide, around 200 different payment methods exist, cautiously estimated. Every single one has its fans. And that’s not surprising: Our local payment culture influences which payment methods (or payment service providers) we prefer. Factors such as perceived payment trends, word-to-mouth, and genuine economic and regulatory conditions all shape our preference for one payment team or the other.
For every company aiming for a new market, it’s crucial to understand the local payment customs inside out. And that’s just the preliminary: Integrating local payment methods and providers can be complex and costly on the technical side. This article will help companies without a payment software background navigate the playing field. How to set up a custom payment system that simplifies payment method integration?
The article details:
The benefits and challenges of local payment methods
Why a custom payment system makes alternative payment method integration easier
How to set up a global payment system with CoreWallet, featuring an orchestration layer for local payment methods
Online marketplaces are complex systems. This complexity is reflected in the Payment Gateway needed for such platforms.
As a marketplace owner, you always have the option to integrate payment systems, offered by external Payment Service Providers. Depending on your business strategy, that might suffice. But using an off-the-shelf PSP will also limit your opportunities. You can’t evolve your marketplace to your preferences if the PSP doesn’t move along with you:
You want to offer payment methods, according to customer demand? The PSP must support them.
You want to scale up your business and move to new markets? The PSP must be set up to handle higher transaction numbers and adapt quickly to local financial regulations.
You want to enable customers to pay via a prepaid e-money balance and securely store their payment instruments? The PSP must offer an electronic wallet.
And so on…
Thus, ambitious marketplace owners might decide to build a custom Payment Gateway and remain in control over payments. As the company behind CoreWallet, the flexible software foundation for payment and e-wallet applications, we are familiar with creating Payment Gateways. It’s important to approach the development process with a clear plan. To help you master the technical challenges, we have compiled the common stages of such a Payment Gateway project for you.
The Metaverse has been one of the hottest topics in business and tech in the last few months. Is this only a buzzword and a hype or does it have a real longer-term potential to become the “next big thing”? You can find supporters for both opinions. However, a lot of big consultancy companies believe that there is no way to fail for the Metaverse.
For example, according to CB Insights “the metaverse could represent a $1T market by the end of the decade”. Deloitte has published a white paper about the potential of the Metaverse and they believe in even higher numbers: “The metaverse may become a paradigm shift for consumer and enterprise behavior, analogous to the introduction of smartphones. It could create a potentially massive new market, with recent estimates of the commercial opportunity as high as $13 trillion and five billion regular users by 2030.” Accenture has launched the Accenture Metaverse Continuum business group to help their clients to understand and make use of the Metaverse opportunities. Its head Paul Daugherty stated that “The next generation of the internet is unfolding and will drive a new wave of digital transformation far greater than what we’ve seen to date, transforming the way we all live and work”.
I’m also rather on the optimistic side of supporters believing that Metaverse is not the hype but a next step in the technological, social and economical development of mankind.
However, before we analyze the current development status and prospects of the Metaverse, paying special attention to the payment topics, let’s review what “Metaverse” actually means and how it is different from “Web 3.0”.
On today’s online platforms, we face an extensive choice of (digital) payment methods, some of them fairly non-traditional (like blockchain-based payments), some having been around for a while (like credit card, direct debit, vouchers and gift codes). In some countries, payment methods that bridge the online and offline spheres of web shopping remain popular, too, such as cash-on-delivery. In others, BNPL and e-wallet-based payment flows are popular. This article will take a deep look into one specific form of online payment, though:
Card-Based Online Payments
These include all manners of payment cards such as Credit Cards, Debit Cards and Prepaid Cards. They may exist in purely digital form or have a physical equivalent. In any case, local banks issue the cards and they operate on the rails of international or domestic Payment Card Schemes.
In the following paragraphs, we will focus on credit card-based payment systems, presenting their basic flows and involved parties (like issuer, acquirer and so on). This article will examine in detail:
Over the last decades, online commerce has become increasingly data-driven. Companies monitor search engine metrics, measure user behavior on their pages or ask customers for their feedback in digital forms.
One branch of data evaluation for e-commerce and service platforms, that promises valuable insights, is Payment Analytics. But it’s also a challenge to set up a functioning environment and make sense of one’s findings.
In our fintech interview series “Finquiry”, payment expert Moritz Königsbüscher addresses the topic and shares best practices.
Our Guest: Moritz Königsbüscher, Freelance Payment Consultant
Moritz Königsbüscher has examined payments from almost all angles. He worked in payments and product management roles in companies both on the payment service provider side and the merchant side (e.g. Arvato, Xing, SoundCloud, RiskIdent). Working as a freelance payments consultant for banks, startups and corporations of varied industries, Moritz recently launched the PreAuth Academy, a service specializing in online payments training.
If you live in a developed country in the modern world you probably do your shopping on Amazon, connect with your friends on Facebook, book your apartment for holidays via Airbnb, order a pizza at Delivery Hero and call an Uber car if you don’t want to drive yourself.
Each one of these companies is an example of a digital platform business and all together they build a so-called “platform economy”.
There are many definitions of what a “platform” is. In the broader meaning, a platform can be any kind of online sales, transaction or technological framework allowing people to connect for any kind of economic, technological or social interaction. Some sources differ between “online matchmaking” and “innovation” platforms, some mention more types of platforms, for example, “innovation platforms” (like Apple iOS or Google Android), “transaction platforms” (like Airbnb, Etsy), “integration platforms” (combining capabilities of innovation and transaction platforms) and “investment platforms” (like Priceline or OpenTable). There is no unique approach in the classification of the platforms.
In the context of this article, we will look at the digital matchmaking platforms (also called transaction platforms) in the first place, like the above-mentioned Amazon, Airbnb, TaskRabbit, Etsy or eBay. The goal of these businesses is to give their users the opportunity to find a service, worker, resource or product that is best fitting to their needs with the lowest possible transaction costs. We will have a special focus on how those platforms are doing the payment processing part for their customers as we believe that frictionless payment is one of the key success factors for online matchmaking providers. And the most interesting challenge would be to try predicting how the payment experience may look in the next stage of economic development, in the so-calledpost-platform world.
Writing a 2021 recap of fintech has been a tough call. No misunderstandings here: A lot has happened in the industry. But we have gotten so used to the future of payments being both digital and mobile (and some would throw a decentralized in there, too). Long familiar talking points continue rotating in the press:
Embedded Finance keeps breaking through.
BigTech companies still follow their payment ambitions.
Invisible payments in mobile and online payment remain attractive for customers.
Embracing Open Banking is significant for all financial players.
The promises of Artificial Intelligence await around the corner.
So what is to write, when we can expect all of this to define the financial industry in the next years? Well, the devil will be in the details: How will those factors play out on the level of specific target groups, use cases or nations? How is the fintech industry holding up as a whole? And what happened in the crypto sphere?