As the cost of living crisis gets worse in Australia the Australian consumer are more and more likely to purchase today pay later (BNPL) services as a way of managing their finances.
Although this may assist in the balance of accounts of retailers in the short-term but there is the risk to retailers in the event of providing BNPL services and costs. Klarna for example, offers merchants a transaction cost of $0.30 and various fees that vary between 3.29 percent and 5.99 percent of the total amount of transactions.
The risk that comes with BNPL for retailers comes with the risk of financial ties. It encourages me to ask whether consumers should bear the burden of BNPL services in order to ease the burden on retailers as the financial squeeze grows more severe?
The potential for Australian to transfer BNPL merchant fees to consumers creates the possibility of a new avenue to lessen the risk of offering the services. Although the move may not be popular but it is an essential decision to help ensure retailers are not just financially viable and sustainable, but also viable in the long-term.
Although the costs may be low, BNPL fees do add in time. Some retailers offer BNPL services but do not pass on merchant fees, there is an opportunity of suffering financial losses of a significant amount because of increased charges and returns.
Transferring BNPL merchant charges to consumers may aid in increasing transparency and understanding. People often do not consider or acknowledge the small charges they are charged through using of credit debit cards at terminals Therefore, why should they not view BNPL products in exactly the same light?
With the ability to empower retailers to address the price of payment, we can enable further transparency for consumers to know the actual costs of using the benefits of BNPL solutions. It in itself, can aid in building the trust of the retail and consumer and is a win-win for both.
There is however one drawback in selling BNPL merchant fees. That is the possibility of losing a customer completely. There’s no doubt that charges for BNPL services could mean the addition of a few dollars not cents that are added to the cost of the customer who is already struggling with economic pressures.
What do we do if we could lower the cost of merchants, but still pass the costs?
White-labeled, embedded finance solutions offer a fresh possibility for retailers to cut the cost of installment payments to customers, as they have the ability to determine the amount they are at ease offering to their customers.
There are currently a variety of white-label integrated finance solutions that retailers can easily use and integrate to payment processes. These solutions let retailers offer their own installment payment solutions that can make for a more smooth payment experience for their customers.
Conclusion
No matter of the method that is taken regardless of the route taken, no matter what the outcome, it is evident that retailers require greater flexibility in the use of instalment payment services that allow retailers the ability to place the surcharge in any location they believe it is needed. White-labeled embedded solutions for finance offer an affordable and flexible option for retailers who want to reduce the costs. In tackling the expense of payments, merchants can build an efficient, transparent and long-lasting payment system for all those involved.
