Consumers want flexibility when shopping for their favorite products or making their next big purchase. Not only do they want more choice in products but they also appreciate a diversity of payment options.
As inflation continues to climb, more people are looking for ways to shop while staying within a budget. Although an economic downturn can lead to a drop in sales, it can also bring about new opportunities. Ecommerce businesses can build brand loyalty, boost their average order values (AOVs), and appeal to more shoppers by offering flexible and seamless payment options at their point of sale.
The rapid growth of alternative payment methods
The rise of online shopping has led to an increase in payment methods. Buy now, pay later (BNPL), which first emerged in the 2010s, has rapidly grown in popularity due to its flexibility, convenience, and ease of use. BNPL is a form of short-term financing that allows shoppers to pay for purchases of $50 and above, usually in four interest-free installments with options to extend plans up to a year or more.
Although Millennials and members of Gen Z were quick to embrace this trend—with nearly half of US respondents in this age range using BNPL according to a 2023 survey from Statista Consumer Insights—the biggest growth in the use of BNPL recently has been among older Americans. According to a Lending Tree survey, baby boomers used BNPL 13 percent more often in 2022 than in the previous year.
BNPL appeals to many consumers, including those who are wary of traditional forms of credit. Shoppers who use BNPL can avoid high APR rates for on-time payments and the hassle of applying for credit.
What BNPL means for online merchants
Online merchants can reap many benefits from offering BNPL options in their online store. Merchants who have integrated BNPL across their ecommerce channels make large purchases more accessible to cost-conscious shoppers. For example, USA Berkey Filters, a Las Vegas–based distributor of water filtration products, offers Amazon Pay with Affirm as an option to its shoppers. The company implemented this payment method in less than one week. Having a BNPL option makes it possible for USA Berkey Filters to accommodate shoppers who urgently need their products.
Shoppers that use BNPL tend to have higher AOVs than those who pay for purchases out of pocket according to a 2022 Affirm report. For instance, merchants that use Affirm have reported 60 percent higher AOVs compared to other payment methods.
BNPL can also help online brands build loyalty and attract repeat customers. Shoppers who rely on BNPL to make online purchases are more likely to return to those websites to look for other products. According to a Lending Tree survey, nearly half of shoppers are loyal to a specific BNPL brand and will opt to shop at merchants that accept their preferred payment provider. In fact, 40 percent of shoppers will look for a cheaper product and will even delay or cancel a purchase if BNPL is not offered.
BNPL with Amazon Pay
With Amazon Pay, merchants can offer a simple and secure checkout experience to shoppers that allows them to place online orders in just a few clicks. Merchants can also offer equal monthly payment options through Amazon Pay, including Amazon Pay with Citi Flex and Amazon Pay with Affirm.
For example, when using Amazon Pay with Citi Flex, eligible Citi cardholders can split their payment for online purchases into equal monthly installments that fit their budget while earning rewards on qualifying purchases. Shoppers that use Amazon Pay with Citi Flex can set up repayment plans with terms of up to 48 months and a promotional 0 percent APR rate.
With Amazon Pay with Affirm, which is available to all US customers, shoppers can pay for purchases of $50 and above at their own pace. Using Affirm’s Adaptive Checkout feature, shoppers can split their payment into four biweekly installments or monthly installments. Shoppers can have peace of mind knowing that Amazon Pay with Affirm has no late or hidden fees and offers APRs starting at 0 percent.
Experts anticipate that alternative payment methods will continue to grow in popularity, with over 104 million shoppers expected to adopt BNPL by 2026 according to Insider Intelligence.
To learn more about alternative payment methods with Amazon Pay, check out this resource.