Thanks to layby and consumer credit, we’ve seen consumer spend churn through even the worst of economic downturns around the world. And with the unstoppable growth of shopping online, layby is now stepping into the digital realm. But it’s not the same layby we once knew.
In comes the evolutionary form of layby that our conservative ancestors never thought was economically possible: Buy Now Pay Later (BNPL) systems. Yes, these payment platforms get customers instant gratification with immediate delivery of the purchase, and the ability to pay for most of it at a later date – interest-free.
Introducing The Contenders: AfterPay and ZipPay
Hot on the market are two young and fine Australian platforms, AfterPay and zipPay, which require integration into an online store checkout. Merchants are charged a fee that varies with the value and volume of transactions processed through the platform. The charge is a little more than your traditional credit and debit card fee, charging up to 4 to just over 6 percent per transaction.
For the customer, it involves simple selection of these BNPL options at the checkout (like how you would choose PayPal) then selecting the desired payment plan. Both AfterPay and zipPay accounts are free for customers to create accounts with and use. But customers are charged fees for outstanding balances with zipPay or late payments with either of the platforms.
So, Yay Or Nay to AfterPay and ZipPay?
There is no doubt BNPL systems are an added convenience to the customer. But for a business to host layby internally is a big credit risk. The beauty of AfterPay and ZipPay is that they bear all fraud and credit risk of the transactions, and guarantee upfront payments for their merchant customers. This comes as good news for smaller businesses that don’t have the resources to build nor host such layby online.
The potential for AfterPay and ZipPay is huge. The reported uptake with AfterPay for online retail is 20 to 40 percent of total sales. So far AfterPay has 1,400 retailers onboard and zipPay has 2,000 merchants. Even major players in Australian retail, Country Road Group has made AfterPay available with all of their brands including Witchery, Mimco and Trenery in recent weeks.
However, results will vary between industries. So before you take a leap into AfterPay or zipPay services, consider the price point of your product offering and customers’ purchase behaviour online. And finally, ensure you have the right traffic going into your online store to get the most out of your BNPL merchant subscription.
The Final Dando Verdict: Yay for AfterPay and zipPay!*
*In condition that you have nailed an effective marketing strategy and an updated online store for your business that works seamlessly across desktop and mobile. If you don’t have either, drop us a line at firstname.lastname@example.org – ASAP!