In the last year, companies offering deferred payment options have boomed on consumer websites and are now used by some of the most recognisable commercial brands. According to The Guardian, a whopping 95,000 customers are opening accounts with Klarna in the UK. We take a look at the benefits of integrating Klarna or Clearpay into your website.
How do they work?
In a nutshell, both Klarna and Clearpay enable a customer to make a purchase and delay the payment to make it more affordable. According to a survey by Compare the Market, one in five shoppers has used a buy now pay later scheme in the last year. The two leading brands for buy now pay later have a slightly different approach; Clearpay split the purchase into four instalments whilst Klarna has three different methods of payment:
• Pay later: the customer has up to 30 days to pay
• Slice it: with options of between three years and three months, the customer pays in instalments
• Pay in 3: the customer’s pays in equal instalments, split over three dates
Both are a simple eCommerce add on for your website and straight forward to integrate, and typically, both have become popular with a younger customer.
What benefits do they offer customers?
There’s a vast range of benefits to deferred payment options for customers that could, in turn, boost your online sales by offering Klarna or Clearpay at the point of purchase.
1) Flexible payment options
This is a particularly strong benefit with Klarna, as your customers will have the autonomy to choose a suitable payment plan, and best of all, =it gives customers the chance to purchase an item that they otherwise might not have been able to afford in one transaction. This helps reduce the ‘basket drop out’ rate and increase your website conversion rates. It is worth bearing in mind that Klarna’s credit card issuers list isn’t as extensive as other companies, but you should still be covered for the majority of purchases as they cover Visa, Mastercard, American Express and Paypal.
2) No sneaky fees
In the past, shoppers would associate store cards and payment plans with high-interest rates and late payment fees, which would deter at the final purchase point. Both Clearpay and Klarna are free to use as long as payments are made on time.
3) Regular reminders
There is no real risk of a customer forgetting to make a payment instalment and being fined, as Clearpay will automatically withdraw each instalment from the customer’s bank account at two-week intervals, and Klarna will take care of sending your customers regular payment reminders with ample time before each instalment is due.
Sounds good? So, what’s in it for my business?
There are lots of great benefits, and as both companies are becoming so widely recognised, they can be easily added to your digital marketing strategy. Check out just three of the top benefits for businesses:
1) Full payments upfront
Whilst the customer is able to spread their costs, Klarna and Clearpay will still pay your business as though a normal full transaction has been completed.
2) Increase in average order value
We have already mentioned customers are more likely to commit to a purchase of higher value if they can spread the cost, which in turn means your average order value will also increase.
3) Customer insights
When you integrate Klarna or Clearpay into your website, you still have access to insightful data. These insights will help deepen your understanding of customer behaviours on your website, such as dwell time, trending products and how customers are choosing to invest in your products.
Both companies offer technical support to businesses but make sure you check their up to date support hours as they may not offer weekend or bank holiday support, so consider if this could impact your business and customer service.
It might all sound too good to be true, but both suppliers offer purchase protection, meaning you are protected against fraud and credit risk too.
For more advice on how to integrate a buy now, pay later scheme into your website, speak to a member of the team today.
