Buy Now Pay Later – FAQs for Customers and Companies

If you’re a seller looking for support regarding Buy Now, Pay Later through Klarna or Clearpay, these are the links for you: Klarna Marketing Guidelines can be found here. Clearpay Marketing Guidelines can be found here.

B(u)y now, we’re sure you have a fairly good idea of what Klarna, Clearpay, Laybuy and the rest of these “Buy Now, Pay Later” services entail. The clue’s sorta in the name, after all. But even if it isn’t obvious from the get-go, the vast majority of e-commerce and online retail stores boast of them as one of their growing options when it comes to methods of payment.

Not one to shop online? Even so, you’re likely to have seen ads for it on social media, or out and about plastered on massive billboards in your local city centre. These payment methods are becoming increasingly popular with consumers, and are an attractive unique selling point for the stores that offer them.

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As with every new trend in e-com, you can never be too sure of the life expectancy of these things. The world of online shopping evolves faster than any other industry, and what’s trending now could be completely different to what’s trending in six months, or a year, or longer.

With the increased popularity of BNPL services, authorities and regulators are calling for changes to be made to the way that these platforms advertise themselves, and how stores advertise the product to consumers.

As self-confessed experts on the world of e-commerce, we wanted to explain some of the changes coming to advertising BNPL for brands, as well as dispel some myths and shed some light on the services for consumers!

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For Customers: How do Buy Now, Pay Later services make money?

This is one of the key differences between these services and loans – they don’t primarily make money from the consumer, but instead from the vendors that offer the service. Klarna, Clearpay and Laybuy are technically products. If a consumer is more likely to purchase with a store that offers BNPL than one which does not, then it gives the first store the edge over the latter. So stores will pay to offer the service, and this is how the companies primarily make their money. From a customer’s perspective this can seem too good to be true, but with this edge explained it makes a little more sense.

For Companies: What’s changing about the way I can advertise Buy Now, Pay Later?

Right now (as of the time of writing) these services are cracking down on the way that stores offer the service through advertising, on their sites and in ads across paid social and PPC. You can no longer push the purchase as a more affordable way of buying – it’s only more affordable in comparison to paying in ways that incur interest or additional fees. You can no longer glorify purchasing through these services, and must instead include a reminder to “shop responsibly” as well as providing a clear link to terms and conditions. For the most part, the consumer must be no further than one click away from the terms of service, and your store’s Klarna/Clearpay/Laybuy/other service landing page must fit the standards as outlined by the service on their website.

For Customers: So, are there any dangers of Buy Now, Pay Later?

Although there are no late fees, hidden fees or interest charges occurring with most of these services, there are other dangers from using BNPL. Many young people are finding themselves in debt from purchasing using the method, with them unable to keep on track with their monthly payments or finding themselves in a lot of debt that they can’t manage.

Another negative could be a potential strike on a person’s credit score, which can have a huge impact on your future circumstances. When it comes to planning for future big purchases, a negative credit score could stop you from being granted more money to borrow on loans or get accepted for a mortgage. Younger people who are being targeted with Buy Now, Pay Later ads may not know this, and therefore might end up ruining their future finances before they’ve even had a chance to learn about the importance of their borrowing status.

For Companies: Is it likely that there will be further regulations/more cracking down?

Right now, BNPL companies are doing all that they can to protect customers as well as the brands that offer their products. They are regulating how their products are sold and are further cracking down on how much leniency a vendor can have when advertising Buy Now, Pay Later.

As these services become more regulated and are subject to the Financial Conduct Authority’s regulations, it’s likely that advertising the services will become stricter and more difficult. The best we can do as times change is to keep following the rules to the best of our ability, and not to risk selling BNPL in a way that negatively impacts the seller, the consumer, or the service.

For Customers: When should I purchase through Buy Now, Pay Later?

Money-Saving Expert Martin Lewis has been fairly outspoken and critical of the services, suggesting that they have more downsides than upsides. However, following his recommendations, he states that you should only purchase items that you were planning to anyway, and that you should budget for the purchases without spending beyond your means. Put simply – don’t purchase something you won’t be able to afford. Other than that, if you are a responsible shopper and know that you are simply spreading the cost and not getting an item for free, then you are all gravy.

For Companies: Are there any resources I can access to update my terms on-site?

In line with the changes to the terms of service for each BNPL company, there are new ways to explain the products on landing pages on your site. In order for your brand to advertise BNPL on paid social platforms, you must be able to follow these examples.

Luckily, most services have created handy guides to update your landing pages, with Klarna even building a demo site that you can explore.

DMT is a digital marketing team based in the heart of Manchester. If you’re interested in seeing how we can help your business succeed online, get in touch, or follow us on FacebookInstagramTwitter and LinkedIn.