Half of UK retailers using BNPL see sales growth, but 37% of businesses will not be tempted

More than 17 million people are buying now and paying later, but debt concerns and lack of relevance are holding businesses back from offering BNPL services to boost product purchase and consideration in the sales funnel.

More than two-thirds of UK businesses (69%) that offer Buy Now Pay Later (BNPL) options to customers have reported at least one improved sales and performance metrics as a direct result, according to new research.

But companies remain wary of the much-discussed payment trend - as 63% told global financial data and insights specialists RFI Global that they are not interested in offering BNPL to their customers.

The research, from interviews of 1,000 financial decision makers in card accepting businesses, found that 61% of retailers offering BNPL saw improved access to new customers, driving revenue growth for 52% and profit growth for more than a third.

Almost six in 10 said new customer acquisition had improved as a direct consequence of offering BNPL, while 43% claimed their customers were buying from them more frequently.

How does this affect performance marketers?

In the world of performance marketing, BNPL schemes have become another factor used in partner and affiliate marketing practices to encourage conversions. 

BNPL services are now integrated onto hundreds of sites that run affiliate programmes making the check out process easier without leaving the page of affecting attribution models. 

Fintech apps like Klarna mean that, even if the consumer doesn’t have the funds ready to go, they are still able to purchase products  on ‘product discovery’ platforms such as TikTok, Pinterest or Instagram. 

This gives brands a wider audience of impulse shoppers to run browsers into buyers.  

BNPL: consumer debt reputation concerns

The glowing findings are not enough to tempt the majority of UK businesses into the BNPL arena, found the research, with “a lack of relevance” being cited as the main reason for not being interested in offering BNPL. 

Pending regulation of the BNPL market in the UK has also increased attention on potential debt concerns for consumers, particularly if they miss payment instalments, with RFI Global noting that some retailers may be wary of much publicised criticism of BNPL as an option for payment. 

The research reveals that one in five UK retailers are concerned about exposing their business to credit risk, a nod to upcoming requirements for BNPL providers to conduct credit checks on their users and register with the Financial Conduct Authority.

But RFI Global insists this is a misunderstanding of how BNPL works, as “the BNPL provider takes the risk, not the retailer”. Despite this, just over a third (37%) of those interviewed said nothing would encourage their business to begin to accept a BNPL service.

UK consumers driven by 0% interest offer

Research by RFI Global earlier this year revealed that the biggest drivers towards BNPL as a payment option for UK consumers were a 0% interest rate (41%), convenience (33%) and getting access to a good deal (31%).  

Across markets newer to the BNPL phenomena, “wanting to give it a try” was a main driver, including Hong Kong, India and Singapore.  

More than eight in 10 UK consumers reported being aware of BNPL, with almost one in five saying they used it, compared to 67% of Chinese and Indian consumers, 31% of those in the US and 40% in Australia. 

Mark Schultz, Global Head of Business Payments at RFI Global, said: “Even though there’s a fee for retailers to offer BNPL as a payment option, most retailers report a clear improvement in sales and other performance metrics.”

Schultz added: “Not being able to access their preferred payment service is one of the key reasons consumers cite as something that can drive them to an alternative retailer.  With inflation creating the biggest cost of living crisis to hit UK consumers in decades, it is in the interest of retailers to provide payment choices. Those that do are more likely to increase repeat purchasing and their bottom line.”