ECommerce is on the rise. The adoption of its technologies has surpassed levels not expected until 2025. And one of the trends fueled by pandemic is Buy now, pay later (BNPL) solutions. As the world sank into an unprecedented economic situation, BNPL saved the day, enabling millions of people around the world to afford products they dearly needed in the midst of the lockdowns and financial difficulty.
As experienced fintech consultants, we will tell you how to develop a custom BNPL solution from scratch, but first, let us briefly explain how BNPL works.
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In its simple form, Buy now pay later service is similar to using a credit card or getting a soft loan. Pay later shopping enables you to buy products online and pay back in installments over a certain period, such as a few months.
This is a more convenient pay later shopping method in which customers make online purchases without paying the bill at checkout. The process is significantly simplified to ensure that customers get the loan quickly and easily. The loan should be paid back on time to avoid late payment fees and affecting your credit score.
Considering today’s consumers are looking for flexible financing options, especially interest-free, because of the financial hardships brought on by COVID-19, BNPL is the favorite for many.
Earlier during the onset of the pandemic outbreak, online sales increased by 16%. But, in the same period, online fraud cases also grew by 30%. With the growth in fraud, governments around the world implemented strict cyber measures to ensure that e-commerce platforms and BNPL services providers are in full compliance with the law.
Software development companies like Relevant have stepped up their effort to guarantee data security among fintech services providers. We provide software and product development services to companies in various sectors, including the fintech space. Recently, Relevant developed a SaaS platform to help UK homebuyers get mortgages, find insurance providers without going through a lot of paperwork.
Relevant guarantees a high-security level and full compliance with the regulations. Our clients have the option to develop a custom Buy now pay later platform to manage their business their own way, which means they have more control of the processes involved in BNPL software development services.
Below are the key features of Buy now, pay later services that you should include as you work on financial app development projects:
Loan terms – depending on the BNPL service provider you use, some offer soft loan options that are repayable after a couple of weeks to a few months. Some high-value purchases may have a repayment period of more than two years.
Convenience – the process of applying for a loan and getting approved takes a few minutes. This is done so quickly that the process can be initiated while the customer is at the point of sale or about to checkout (if it’s online).
Purchasing power – different BNPL providers have different caps on loans they extend to customers. Some may offer up to a $20 000 loan.
Repayment frequency – the loan offered to customers is repaid periodically. Customers may be required to pay back in weekly or monthly installments. However, usually, merchants are paid in full.
Paperless – the process of applying for a loan and getting approved is fully digital. Customers do not need to print or sign any documents.
Mobile wallet pay payments had a trajectory of 80% increase from 2015 to 2020. The recent global pandemic pushed the growth even higher due to increased online sales. This sector will continue to not only grow but also change the way of conducting business. Below are some of the trends on the future of mobile payments. Read also: Developing a Palm Scanner Solution for Payments Like Amazon One
Digital wallet user base increase – the analysts predict that the amount of digital wallets globally will grow from 2.3 billion users in 2019 to 4 billion users in 2024.
The disappearance of physical payment cards – it comes with no surprise that the increase in mobile wallets has resulted in a decline in the usage of bank cards for payment.
High demand for mPOS solutions – mobile point of sale is a decentralized checkout system that allows customers to complete payments from anywhere. According to Business Insider, the mPOS units will increase to 27.7 million by the end of 2021.
The rise of social shopping – most of the popular social media platforms can support e-commerce. It is believed that customers will utilize those platforms to shop online if they come across their choice of products.
The growth of biometric authentication – customers will increasingly use dual authentication methods to ensure that their mobile wallets are safe. That makes fintech app security solutions crucial for guaranteeing the safety of transactions and access to data.
The success of the Klarna mobile payment app has drawn the attention of many developers. Most of them have started brainstorming how to develop an Affirm-like mobile app, or simply a Klarna related app. Below are the steps to take if you want to build a custom pay later app:
As consumers are turning to BNPL services as a preferred way of shopping online, eCommerce companies should consider the ‘buy now pay later for business’ model as a way to maximize their revenue. Below are some of the ways to successfully implement a pay later app development project for your online store:
To develop a sound application, account for the following:
There has been a 30% increase in e-commerce fraudulent activities, compared to a 16% in e-commerce sales. Such a significant increase in fraud cases compared to actual sales leads to developers seriously considering ways to maintain secure transactions.
Experienced fintech software development services providers will ensure that they develop an app that is reliable for handling and processing transactions. Below are ways to ensure a secure Buy now pay later app development process:
With so many apps being developed each day, developers should ask themselves whether their application solves a particular problem. You need to ensure that your customers need your app; that is well-designed and easy to use. Below are some of the things to consider in building a user-friendly, convenient app:
Some of the steps you can take include identifying the needs of users. Identifying such needs involves striking a balance between product and risk management during the development phase.
Developers need to assess the following:
Having an effective engineering process is a crucial part of developing a shop now pay later software solution for eCommerce. With the rapid advancement in fintech app development technology, it is quite common for fintech app development projects to fail after they have passed the ideation phase.
Your engineering process or development model will determine whether you will have a competitive edge and short product release cycles. Here are some of the things to consider:
The recent surge in the use of BNPL services due to COVID-19 drew the attention of many governments. A lot of complaints were raised by payment authorities regarding the state of regulations of this industry. Special rules are needed to govern the BNPL commerce.
In response to the complaints, the European Commission produced an update of the consumer credit agreements that accommodate BNPL service providers. In 2021, the Financial Conduct Authority of the UK will announce new BNPL stipulations as well.
These will protect users under the agenda that the UK government published on 2 February of 2021. Also, Australia will not be left out, its Reserve Bank is deliberating fresh rules for the BNPL industry.
The main issues that concern regulators include:
For example, in the USA a handful of users have missed at least a single payment. Over 50% of the users were close to the limits of their credit cards when they started using BNPL services.
As the e-commerce wave sweeps across nations, due to the increase in smartphones and the global pandemic, consumers have shifted the interest towards online shopping. Slowly, the future of businesses appears to be online, with models built around mobile solutions and experience.
Most eCommerce companies are outsourcing to fintech development companies for building fintech apps. This is helping them to stay competitive by offering pay later shopping solutions to customers.
Ukraine is one excellent country to outsource your development project. You can hire competitive firms, like Relevant Software for your BNPL software development project to start a buy now pay later business. Relevant also provides digital mortgage software development, among other fintech IT services.
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