Maximizing customer value and revenue growth with flexible payment options

Consumers are demanding frictionless experiences for all their transactions. Offering flexible payment options can reduce cart abandonment and even increase average order value (AOV) by giving customers the freedom to spread the cost of their important purchases.¹

BNPL was used by 11% of US shoppers to when buying online in April 2024, and it’s predicted total BNPL spending in the US will grow by 12.3% YoY in 2024, according to an eMarketer forecast from July 2023 ⁹. Both estimates could mean revenue increases for merchants offering these options, as well as greater long-term customer value.

The rise of flexible payments

Consumer payment trends are evolving in line with the cost of living crisis, offering more ways to spread the cost.

Popular flexible payment models include BNPL, which millennials and Gen Z are particularly engaged with, according to Insider Intelligence and eMarketer⁹. Gen X and Baby Boomers are also beginning to show increased BNPL adoption⁹, which demonstrates how important it is for e-commerce sites to embrace the flexible payments evolution.

How is payment flexibility beneficial to your customers?

Payment flexibility can allow customers to spread the cost of their purchases over time without interest, as long as they manage their BNPL payments well and the cost remains affordable. This could make larger purchases easier to access for more customers. 65% of BNPL customers surveyed say they use BNPL to prevent overspending and stick to a budget ². In a separate survey, 39% of respondents said they use BNPL to avoid credit card interest rates, and 24% say they like being able to spread the cost of purchases without a credit check ⁹.

Enhancing customer loyalty through payment flexibility

Offering flexible payments can influence customer lifetime value (CLV) by enhancing customer satisfaction and loyalty. BNPL customers are engaged over a longer period and are more likely to make more frequent purchases ². BNPL data provides enterprises with insightful customer data that can help them acquire and retain customers. Customer acquisition could also experience an uplift, as many consumers are reportedly more likely to complete a purchase if they can choose BNPL ².

How PayPal’s flexible payment options can transform customer experience

Implementing pay later options can become a growth catalyst for large enterprises. PayPal can help increase checkout conversion by an average of 33% with LE merchants ⁶. 84% of PayPal purchasers also say paying with PayPal Pay Later had a positive impact on their purchase experience ⁷.

Future of flexible payment models

Thanks to its popularity, BNPL is rapidly evolving. This is what the future could hold for merchants offering innovative payment solutions.

Integration and convenience

Merchants are likely to keep simplifying the integration of flexible payment options into their checkout experiences. Shopper expectations at checkout include fast loading times, cross-device compatibility, omnichannel payment options, and loyalty programs.

BNPL regulatory compliance

As BNPL grows in popularity for customers on a budget, providers need to continue to act responsibly. This may mean that BNPL products need to include affordability checkers and appropriately advise consumers choosing to pay in installments. There are calls to regulate the payment method more rigorously in the US, which could change the way enterprises charge late fees and manage dispute resolution for BNPL customers. It’s essential to keep up with these regulatory and compliance requirements to make sure the product offering is transparent.

Expanding the payment options spectrum

BNPL use has been growing year-on-year³ and awareness is growing in parallel². According to The Dec 2023 Insider Intelligence Ecommerce Survey conducted, 21% of 18-34 year-olds have used BNPL before but currently don’t use it regularly, and 25% haven’t used BNPL but may be interested in using it at checkout in the future ⁹.

Anticipating technological breakthroughs

DeFi payment solutions – also known as decentralized finance – allow consumers to pay online with no third-party involvement. This means reduced fees and delays, as well as global accessibility to financial products.

One example of this is the blockchain. Blockchain payment models can speed up payment authentication and offer security through encryption. Payments represented 44% of global blockchain revenue in 2022, and this is expected to reach $1.4 billion worldwide by 2030 ⁸.

Offering flexible payment options can enhance customer loyalty and long-term value. BNPL is one way to do this, and its popularity is growing every year.

PayPal can provide enterprise-level solutions that meet the evolving needs of both businesses and their customers. Reimagine your checkout with PayPal.