Just in time for the holiday shopping season, PayPal will let you offer customers a buy now, pay later option. Bonus: You get paid right away.
People love deferred interest financing programs, especially toward the end of the year when holiday shopping puts the squeeze on their wallets. So the timing makes sense for PayPal to announce Tuesday that it is offering a “Bill Me Later” option to small- and medium-sized businesses.
This means you can now give your customers the ability to buy now and pay later for purchases of $99 and above. After credit approval, they’ll get six months of no-interest financing (if they pay off the balance within that timeframe).
It’s a pretty good deal for small businesses, as well. They will get paid right away and won’t have to assume any additional costs or credit risks. And PayPal gives them the code to plop a banner ad anywhere on their websites.
A Forrester Research study recently found that giving customers the ability to receive a bill later helps businesses increase average order sizes by up to 75% and drive incremental sales by up to 43%. While that claim can’t be investigated because the study isn’t public, having the option to stave off paying for items certainly is going to appeal to some people.
Businesses that have used it as part of a pilot over the last month seem to be impressed.
“It’s very easy to set up and install,” says Nick Capinski, senior content and engagement marketing manager for Eastwood, a Pottstown, Pennsylvania, direct marketer of tools and supplies to restore and customize classic vehicles. “We’re using the Magento Enterprise platform and when I had the scripts with the banners emailed over to me I had the first one up in the website literally in under five minutes.”
Capinski says prior to implementing Bill Me Later, PayPal accounted for about 35% of its online purchases. After incorporating the payment option for a couple weeks that number bumped up to 37.5%–a not insignificant increase considering Eastwood generates somewhere between $20 million and $30 million a year in sales.
Minneapolis-based Midwest Supplies, the largest provider of home brewing and wine-making supplies in the U.S., also has been been offering customers Bill Me Later for the last month. CEO David Kidd says so far it has resulted in a handful of sales. He added that he’s been looking for a buy now, pay later option for a while.
“Unfortunately, after reaching out to GE or Wells Fargo or some of the large banks that provide a lot of the commercial financing that you see in furniture stores or appliance stores, we were an anomaly for those groups and we didn’t fit into any of the buckets that their underwriters looked at,” he says.
There don’t appear to be any risks to trying it out, effectively making it a win-win-win situation (with PayPal itself sure to garner more business and consumer customers).
The only folks probably not happy about small businesses offering their customers Bill Me Later are probably the credit card companies and the people who use it but don’t pay off their balance within six months–Bill Me Later’s Annual Percentage Rate is 19.99%.
Source: Inc. Magazine
