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Blog Summary:
Buy Now Pay Later (BNPL) apps have created a stir among online buyers by offering them the flexibility to purchase their favorite products today and pay later. It reflects that the app has a growing craze and brings huge revenue generation opportunities. If you seek BNPL app development, you are in the right place. This post helps you explore all vital details, from features and benefits to monetization models and development steps. Let’s start.
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The fintech industry has witnessed numerous trends – one such trend is Buy Now Pay Later. The unprecedented popularity of apps like Affirm, Afterpay, Sezzle, and others reflects how this trend is evolving. Statista reveals the worldwide transaction value of BNPL in eCommerce will be approximately $386 billion in 2024, which is likely to climb up to $834 billion in 2028.
This figure may prompt you to develop a Buy Now Pay Later app, especially when you are looking to start a new business venture. One of the major advantages of developing these apps is that they open a new avenue of revenue generation.
So, if you seek to grab new revenue generation opportunities and develop a BNPL app, this post serves as a complete guide. It provides all the necessary information to develop your app successfully.
Buy Now Pay Later has become the most sought-after term recently. As the name suggests, it’s a payment option that customers can use to pay over time for the products they purchase. With BNPL, customers can pay in installments, which is interest-free.
BNPL aims to offer an alternative to credit cards and allows customers to purchase items even without paying any upfront cost. Meanwhile, any missed payment leads to late fees. Some BNPL service providers can charge interest on extended plans.
BNPL is popular because it offers convenience and lures mainly younger consumers. Many top-notch apps, such as Afterpay, Sezzle, and others, offer these services to customers while letting them experience hassle-free online shopping.
Buy Now Pay Later App Development can help businesses tap into new revenue streams by offering flexible payment solutions.
BNPL involves several stakeholders, such as users, merchants, and payment gateways. Users are individual buyers who seek to purchase products with flexible payment options. Merchants offer products and services. Payment gateways work as mediators and provide BNPL transactions between users and merchants.
Let’s understand here several steps of how BNPL works:
Though BNPL apps have witnessed a vast demand among consumers for offering payment flexibility, their success still depends on core features. The following are some of the features you can implement to ensure the success of your apps.
Make sure your BNPL application has a simple registration process to create a good impression on users. It should also have a hassle-free onboarding process to allow users to set up their accounts quickly and use the service with minimal friction.
To make your app more advanced, you can incorporate an automated tool such as Optical Character Recognition (OCR) for scanning documents or IDs. It makes the process quick and seamless.
Most BNPL apps also include biometric authentication, such as facial recognition or fingerprint. This helps improve security and enhances the speed of the onboarding process.
It’s one of the core features of any BNPL application, tantalizing the senses of users who wish to have flexibility in payment for their purchases. Your application should offer different payment schedules to users and give them the liberty to pay in weekly, bi-weekly, or even monthly installments.
Your app allows users to select different installment durations, such as 3, 6, or 12 months. This allows users to tailor their payment plan based on their financial situation. Your app can boost user satisfaction by giving users the flexibility to pay the remaining amount even early without any penalty.
Your BNPL app should have multiple payment options such as debit, bank transfers, credit/debit card payments, digital wallets, etc.
You need to incorporate a quick check feature into your BNPL application, which is essential to offering a seamless user experience. The feature should quickly check users’ eligibility in real-time without adversely impacting their credit scores.
Your BNPL application should be capable of leveraging advanced algorithms, financial data analytics, etc., to analyze the creditworthiness of customers. Based on this, the app can approve or reject transactions quickly. It removes the necessity for lengthy paperwork or approvals, which can frustrate users.
To make your app more effective, you can integrate it with various eCommerce platforms. This integration ensures customers can access BNPL services directly when they go through the checkout process. To maximize the reach of your app, you can integrate it with some leading eCommerce platforms like WooCommerce, Shopify, Magento, etc.
Besides, some apps are available with plugins or APIs, which merchants can integrate into their custom-built eCommerce websites. This integration works effectively to simplify the process of offering BNPL as a payment option. It helps merchants catch the attention of more customers and minimizes cart abandonment rates.
Make sure your app follows regulatory standards. You can implement various secured payment gateways for processing transactions. Your BNPL app should include various security measures, from tokenization and end-to-end encryption to two-factor authentication.
Many fraud detection mechanisms, including real-time monitoring and ML algorithms, can also identify and prevent fraudulent transactions. This ensures full protection for both consumers and merchants and prevents merchants from suffering financial losses.
Your BNPL app is incomplete without notifications and reminders. These are essential to inform users about managing payment schedules and avoiding missed or delayed payments.
The app should be capable of sending reminders and notifications to inform users about upcoming payments, successful transactions, due dates, etc. The major benefits of notifications and reminders are that they ensure users never miss any installment and offer full transparency with the progress of payment.
It’s another must-have feature for your BNPL app. It should offer merchants an option to gather complete details related to transaction history, customer behaviors, performance metrics, etc. With this information, merchants can easily draft solid business strategies.
Merchants can access features such as payment status, sales tracking, customer segmentation, etc., to get an idea of their customer base and also easily find patterns and trends. They can use these details to formulate an effective marketing campaign, boost user experience, and increase profit.
Apart from this, real-time reporting also lets merchants analyze their cash flow. It enables them to plan their future inventory access to sales through the BNPL applications.
Offer seamless payment flexibility and enhance customer satisfaction with our expert development services tailored to your business needs.
Apart from offering convenience and flexibility, Buy Now Pay Later apps offer many other benefits. Let’s examine them in detail.
As mentioned above, a BNPL app gives customers a flexible payment option for their purchases. It prevents them from paying the full amount of the product they purchase. Instead, customers can avail of interest-free installments.
With this flexibility, customers find it more convenient to control their cash flow, especially when they make heavy purchases. It also eliminates the necessity of using high-interest credit cards.
The BNPL app helps merchants to increase their sales figures with vast customer engagement. When merchants offer BNPL as an option at checkout, they can witness a higher conversion rate.
The reason is already explained—BNPL service prevents customers from making immediate payments. It also helps merchants witness an increased average order value from customers. Therefore, a BNPL app creates a win-win situation for both merchants and customers.
Financial institutions mainly support BNPL apps to run them profitably. These financial institutions charge merchants who opt for BNPL as a customer option.
Though the BNPL plan is meant to serve customers with interest-free installments, customers need to pay interest when they fail to pay on time. So, it’s another way financial institutions earn revenue.
With a BNPL app, you will come across various monetization models to earn revenue. Explore here some of the popular BNPL app monetization models you can consider implementing.
It’s one of the ways your BNPL app can earn revenue. For every transaction, you can charge merchants a certain fee. On the other hand, merchants get more customers to sell their products and can increase their average order value.
In return, BNPL service providers charge a certain percentage as a commission of the purchase price. This fee helps them maintain the infrastructure of their platform and operate it successfully.
As mentioned, when users fail to pay on time, they must pay late fees imposed by the BNPL service provider. The late fee tends to vary, ranging from flat fees to a certain percentage of the total outstanding amount.
Many BNPL apps also offer an option of an interest-free period since they rely mainly on late payment to increase revenue. Meanwhile, depending extensively on late fees can adversely impact the reputation of BNPL platforms.
Most BNPL service providers offer interest-free payment plans only for a short term; they charge for extended or delayed payments. This happens, especially when users choose long installment plans that tend to go beyond the initial interest-free window.
The rate of interest also depends on the credit profile of users and the overall duration of the payment plan. It allows BNPL platforms to generate extra income on high-value transactions.
A BNPL app can access details related to customers’ purchasing behavior through analytic tools. It can use such data to offer cross-selling opportunities, including recommendations of complementary items.
Besides, the BNPL app can help the brand run its target market campaign, thus creating a new revenue option. The brand can also charge merchants to increase the visibility of their products and services.
So, after getting a lot of information regarding the Buy Now Pay Later service, you may be interested in exploring some of the popular BNPL apps. Let’s find out here.
Klarna allows users to split the price of the products they buy into 4 small and interest-free payments. It has partnerships with several online retailers and thus allows customers to purchase products from different categories, ranging from electronics to fashion.
Apart from offering a seamless user experience, Klarna also allows users to manage purchases, get personalized shopping recommendations, track deliveries, etc.
Afterpay is much talked about for its easy payment structure. It allows users to split the overall purchasing amount into 4 interest-free installments. It doesn’t charge any hidden fees for users who pay on time.
As a user-friendly BNPL app, Afterpay has a tie-up with several retailers. It allows customers to browse and shop a wide range of products, including fashion, beauty, toys, home, tech, and others.
Affirm makes shopping convenient and simple for customers. It lets customers browse their favorite stores, select payment terms based on their budget and preferences, and complete purchases. The app enables customers to experience stress-free shopping and enjoy it everywhere with their Affirm Card.
Zip, earlier popular as Quadpay, gives users the complete liberty to split the total purchase amount into 4 easy installments, which will be interest-free.
It allows users to enjoy shopping for several products online and in-store. Versatility is one of its crucial features. The Zip app boasts a budgeting tool that enables users to manage their spending more efficiently.
Sezzle gives buyers complete liberty to break down the overall amount into 4 interest-free payments. The app makes shopping more accessible for customers while letting them manage their budgets conveniently.
With Sezzle, customers can find a smart way of shopping, earn rewards, and manage finances effectively.
BNPL app development involves multiple steps and thorough planning. Get details of every crucial step to plan your pay-later app development accordingly.
Thorough market research is necessary to gather information regarding target customers, market scenarios, competitors, etc. It helps you identify user requirements, pain points, and potential partners like retail stores and e-commerce platforms.
The next step is to define important features for your BNPL application that match user expectations. You can consider necessary functionalities like credit assessment, registration, authentication, transaction history, flexible payment options, etc., to implement.
Selecting the right tech stack is necessary to ensure the scalability and performance of an app. For backend development, you can go with Node.js, Python, Java, etc. Front-end developers can opt for cross-platform development frameworks like Flutter and React Native.
It ensures your apps’ cross-platform functionality. You can select Azure or AWS for hosting and use MongoDB or MySQL for databases.
You need to create an intuitive user interface (UI) for your BNPL app to provide a mind-blowing experience to users.
Right from the registration process to payment, the UI of your app should offer a seamless user flow. You should focus on various attributes like responsiveness, ease of use, etc.
For payment gateway integration, you should always select reliable payment gateways like PayPal, Stripe, etc. Make sure the payment gateways you integrate support different currencies and also regions.
Besides, you can integrate API for credit checks, user authentication, analytics, etc., to provide an unmatched experience.
To make your BNPL app capable of handling sensitive information, you can implement various secure encryption methods, including SSL. This ensures the app adheres to data protection regulations, including GDPR.
You need to keep yourself versed in local financial rules and regulations and get the necessary licenses to operate your app without any hustle.
Testing is necessary to check for security vulnerabilities, bugs, and various performance-related issues. So, it’s necessary to conduct thorough testing of your app across multiple operating systems and devices.
Ongoing maintenance and updates are necessary to keep your app updated and relevant. You can analyze your app’s performance continuously, resolve issues, and update regularly. To improve your app, you can gather user feedback to improve its features.
So, you might be interested in knowing the cost of developing a BNPL app. The cost of developing such apps starts at $40,000 and can go up to $1,50,000.
Sometimes, the cost goes beyond $1,50,000. Numerous factors directly influence the cost of building a Buy Now Pay Later app. Some of these factors include project complexity, features, developer expertise, development regions, etc.
Let’s get a complete idea regarding the BNPL app development cost using the following cost comparison table.
| Features | Cost |
|---|---|
| Backend Development | $20,000 to $30,000 |
| UI/UX Design | $7,000 to $10,000 |
| API Integration | $10,000 to $15,000 |
| Testing | $5.000 to $8,000 |
| Maintenance and Support | $5.000 to $8,000 |
While developing a Buy Now Pay Later app, you will witness a myriad of challenges as well. So, it’s better to know all those challenges and tackle them properly. Let’s discuss some of these challenges:
One obstacle to developing a BNPL app is regulatory compliance. Many financial bodies and even the government scrutinize BNPL providers more frequently due to the growing concern about consumers’ financial literacy and debt.
So, it’s the responsibility of your developers to ensure your app adheres to local laws for interest rate caps, lending laws, etc.
Since a BNPL app deals with the user’s personal data, foolproof security measures need to be implemented. The app should be able to offer full protection against cyberattacks and data breaches.
Implement various security measures, such as secure payment gateways, encryption, multi-factor authentication, and more. Ask your developers to build a system that can identify and reduce fraudulent transactions.
The BNPL sector faces huge challenges in standing out in the cutthroat competitive market. To tackle this, a BNPL app should have cutting-edge features and unique selling propositions (USPs).
An application development team needs to perform thorough research to find gaps in your competitors’ services. This helps them create the best BNPL app for you by implementing necessary features like loyalty programs, personalized payment plans, etc.
Credit management is one of the core aspects of any BNPL app. Developers should create algorithms that can more accurately assess users’ creditworthiness rather than relying on their traditional credit scores.
So, it’s pivotal to balance both risk and accessibility. The main reason for this is that a clumsy credit check tends to exclude even those of responsible borrowers.
With 15+ years of experience and 270+ team strength, Moon Technolabs is a stalwart in the fintech industry. Since our inception, we have grabbed an ocean of opportunities to develop a variety of fintech apps, including the BNPL app.
We have a bunch of seasoned app developers who build high-grade BNPL apps while focusing on user-friendliness, scalability, and cost-effectiveness. Our team follows a systematic process of BNPL app development and accomplishes in multiple phases;
Drive more sales and build customer loyalty with a fully-featured, secure Buy Now Pay Later app. We provide end-to-end development services to make it happen.
So, now you have all the required information to proceed with your BNPL app development. Now it’s time to hire a reputed Buy Now and Pay Later app development company to make your journey successful. At Moon Technolabs, we are the right option for you. All you need to do is to share your project details now to start your app development.
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Jayanti Katariya is the CEO of Moon Technolabs, a fast-growing IT solutions provider, with 18+ years of experience in the industry. Passionate about developing creative apps from a young age, he pursued an engineering degree to further this interest. Under his leadership, Moon Technolabs has helped numerous brands establish their online presence and he has also launched an invoicing software that assists businesses to streamline their financial operations.
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