Buy Now Pay Later App Development

Digital payment options such as e-wallets, bank transfers, QR code scan and transfer, and mobile wallet banks have been gaining great popularity all over the world. The market size of these easy-to-pay methods is rising unprecedentedly giving a boost to brands to offer more convenience to customers. A research giant online portal Statista quotes the BNPL market share of 5% globally.

Klarna, a supreme example of a BNPL app, witnessed a whopping 19.8 million downloads only in the US. A further report on the same portal showcases BNPL’s rise in domestic eCommerce payments in 41 countries marking that eight out of ten top global buy now pay later are from Europe and soon it is going to conquer all global markets. It is high time that you build an eCommerce app to lead the market by adopting the BNPL concept.

Let’s start with the basics:

What is a BNPL application?

A BNPL or buy now, pay later application is a mobile app built to provide a convenient way to split the total amount of any goods you purchase into smaller manageable monthly or daily installments. This method makes the app a perfect budgeting tool to buy larger or costlier items. BNPL could be a worth considering idea to venture for a fintech startup. Its budgeting plan makes it a win-win situation and therefore, the chances of your fintech app success are more.

A vendor sells items easily and customers can buy even costlier items by paying installments. On the other hand, app owners levy some fees and terms associated that users, customers,and vendors need to mind. Due to this convenience, the purchase capacity of a buyer has increased manifold, globally.

Understanding Buy Now, Pay Later (BNPL) apps concept

BNPL applications streamline anyone’s finances as they offer a smarter and more convenient way to buy anything – small or big at any cost. Managing purchases is easy with BNPL applications as it empowers customers or users with flexibility in budget and splitting costs into easy and managed installments. This frees up the cash flow for other requirements and unexpected expenses.

There are four basic concepts on which buy now and pay later applications work for any purchase with any company.

Manageable payments: BNPL allows customers or users to split their purchases into convenient installments – monthly or daily. This makes budgeting easier for them.

Enhanced flexibility: When the cost of the purchase is spread over time, buyers can free up cash flow for other essential or unforeseen expenses. This gives them flexibility.

Fast & easy approval: Unlike other complex procedures, BNPL needs a soft credit check and the services are available for quicker and easier purchase of any kind.

Seamless integration: Most online stores, merchants, and retail stores integrate BNPL with ease and right at the checkout. This makes it more convenient for vendors.

Why develop a BNPL app?

The surging demands for apparel, electronic goods, and other materials have been on high rise. Buyers are now managing their finances to fulfill their dreams. Hence, if you want to venture into a fintech startup, investing in building a BNPL app is worth considering. Because it fulfills the need for flexible payment options. These applications cater to this grave demand by enabling customers or users to break the total bill amount into smaller installments.

The market demand

Zion Market Research quotes that the global consumer electronics market size was worth nearly US $1.10 trillion in 2021 and is likely to grow with a compound annual growth rate (CAGR) of 7.6% reaching the total market value of US $1.70 trillion by 2028. While these figures are just for electronic items, BNPL is an option available for almost any purchase today. It is in high demand due to a win-win situation for both – buyers and vendors.

Consumer benefits of BNPL apps

•  Financial flexibility: BNPL enables customers or users to budget effectively as it is possible to split the total invoice amounts into little installments. This can help them save money to invest or expend somewhere essentially.
• Interest-free finance: Many BNPL services offer interest-free transactions and finance options on purchases above certain amounts. This allows customers to enjoy buying without any worries.

Merchant benefits of BNPL apps

•  Increased sales: Offering BNPL options to buyers at checkout or right while selecting an item boosts the confidence of buyers to purchase things. The overall sales can be boosted manifold with BNPL apps.
• High average-order value: With the BNPL option, consumers are willing to splurge on costlier and bigger items as they don’t need a straight downpayment of hefty amounts. This leads to a high-value order increase.

Understanding the BNPL business model

If you wonder how BNPL apps make money, you need to think about it in a simple way. It is a win-win situation created by this easy-budget option. It is essential to understand the BNPL business model that is worth considering faster ROI.

Let us see how BNPL works:

The basic workflow

1. Shop and select BNPL: at checkout, a customer opts for the buy now, pay later option offered by the store or retailer through a dedicated application.
2. Split the bill and approval: the BNPL service automatically breaks the total amount into predetermined installments that are small and manageable. A quick credit check (generally a soft check) is needed in some cases for approval.

3. Initial payment and purchase done: the customer pays the initial amount (generally 25% of the downpayment or even nil payment in some cases) and gets the purchased items.
4. Scheduled payments: the remaining balance automatically gets deducted from the customer’s chosen payment method – could be a debit card, a credit card, or directly from the bank. The tenure or installments could be daily, bi-weekly, or monthly.

The BNPL revenue streams

1. Merchant fees: BNPL providers levy charges to merchants as a fee for each transaction or purchase using their services.

2. Late fees: customers who miss the installments on a scheduled date are charged late fees and, therefore, companies get extra income.
3. Interest charges: Though many BNPL services offer interest-free budgeting options, some charge interest or file charges on outstanding amounts after promotional offers.

Key features of a BNPL application

For a successful BNPL application, user experience is of paramount importance. An app with an intuitive and attractive UI with easy navigation is key to BNPL app success. It allows users to easily understand and use the app with its features.

You must have a seamless integration with other online store systems for BNPL and it is crucial to have checkout without any hassles or complexity in payment. Here are these features to glance:

UI/UX: An easy-to-navigate option and intuitive UI components of BNPL apps are mandatory to stay in the market.

Easy integration with eCommerce apps: An easy integration with online shopping apps such as eCommerce is the best feature you can have. It offers frictionless checkout experiences and customers can easily opt for BNPL.

Secure payment gateways: Regarded as one of the key features of a mobile application, a safe payment gateway prevents fraudulent transactions and multiple options such as eWallet, bank or wire transfer, and card payments. Not just security measures, but you can also have more business benefits and customer-centric benefits through payment gateway integration in your BNPL app.

Customer credit assessment: One of the useful features of a BNPL app is offering customer credit checks and soft credit checks to know the eligibility.

Notifications and reminders: You can have a very useful BNPL app feature where timely notifications are sent to avoid late fees.

Account management/transaction history: You can extend your BNPL app’s capability by having a feature of a one-stop dashboard that shows history and helps manage accounts.

How to set up an effective BNPL development process?

There are certain steps to build an app. In most types of such solutions, the steps remain common; nevertheless, here is the outline of how to build a specific BNPL mobile application:

1. Market Research & Competitor Analysis: Begin with understanding user needs, market trends, and what existing BNPL apps offer.
2. Define Business Model & Value Proposition: Build a clear revenue strategy and identify what makes your BNPL app unique and appealing to customers.
3. Design User Interface & Experience (UI/UX): Prioritize a user-friendly and intuitive UI that ensures a smooth user journey.
4. Develop Core Features & Integrations: Focus on building essential functionalities like secure payments, credit checks, and merchant partnerships . You can refer to a mobile app development guide to learn more about the process of putting forth your points to developers.
5. Test for Quality Assurance &Security: Ensure rigorous testing for a flawless app free from bugs and malfunctions.
6. Deployment & Continuous Improvement: Launch your BNPL app and gather user feedback to improve features and optimize performance.

The cost to develop BNPL app

Though the exact ballpark figure is difficult to quote, the BNPL app development cost may range from US $30000 to US $250000 or even more depending on the myriad factors mentioned below.

How to implement BNLP in your store?

There are easy steps to have a BNLP option for your store.

•  Partner with a BNPL provider: Choose a reputable BNPL service that aligns with your business needs and target audience.
•  Integrate the BNPL option: Seamlessly integrate the BNPL system with your existing POS system for a smooth checkout flow.
•  Train your staff:Train your staff on the BNPL process and benefits to effectively respond to customer concerns and promote it.
• Market the BNPL option:Exhibit the availability of BNPL at checkout, online store displays, and marketing materials to attract customers with flexible payment solutions.

The challenge of Buy Now Pay Later for business

Like other business models, the BNPL also comes with some challenges mentioned below:

•  Merchant Fees: BNPL providers charge fees per transaction that potentially impact your profit margins.
• Fraud Risk: BNPL providers handle fraud checks but you might face some responsibility for the same.
• Late Payments: Customers who default on BNPL repayments lead to bad debt for your business.

Want to build a high-selling BNPL app?

Want to build a BNPL app that dominates the market? Choose the best app development company that focuses on seamless UI/UX and integrates the system smoothly into your existing sales process. We implement the right mobile app tech stack to build bespoke solutions that not only align with your business objectives but also satiate the industry needs. Stand out with unique features, and build your own BNPL app now.

Pragnesh Modh

With a deep interest in new technologies, analyzing mobile application trends and impressive technical concoctions keep him inquisitive. In addition to managing the Operations and Delivery of projects at Prismetric, he likes to read and write a lot about the latest in technology. New app technologies, gadget fascinations, and big technology announcements kindle the writer in him spontaneously. His articles are his passion for innovative technologies.