Buy now, pay later platforms
‘Buy now, pay later’ (BNPL) platforms – such as Afterpay, Zip and Humm – have exploded in recent years. In fact, according to our latest Telstra Business Intelligence survey, almost half (43%) of consumers use them1. They’ve spread beyond online stores, too. You’ll find ‘buy now, pay later’ services in a host of physical stores across retail, hairdressing salons,and other essential services such as dentists, and the local butcher.
How it works
‘Shop now, pay later’ platforms are built on a credit model. The platform fronts the payment to the business on behalf of the customer and the customers can then buy now and pay in instalments within the terms they’ve agreed to with the platform. Although they were initially online only, consumers and business can access these platforms online and in-store through dedicated ‘shop now, pay later apps’.
The providers
There’s a growing list of players in the buy now pay later services space, each with variations on the pay-by-instalment model. While Afterpay and Zip lead the pack, Humm, OpenPay, Limepay, Klarna, Splitit and more aren’t far behind.
What they offer consumers
While credit cards are on the decline, BNPL platforms continue to rise as they offer fewer credit checks, speedy approvals and potentially lower costs to the consumer. These platforms allow customers to take home what they want right then and there, even if they don’t have the funds immediately available. Their frictionless buying process, through integration with apps and online stores, is also a big benefit.
What they offer your business
According to our latest Telstra Business Intelligence survey1, the majority of businesses (72%) who are using these platforms say they’ve encouraged consumers to spend with them. However, they come with a cost. Typically, the charge for accepting a payment is in the 3-6% range, higher than other electronic payments. Plus, the no-surcharge rules limit the ability for businesses to recoup these costs by charging more for goods or services.
Third-party payment processors
With more than 7 million Australian shoppers, PayPal is the biggest player in the third-party payment processors league. And during COVID-19, PayPal Australia customer sign-ups almost tripled in comparison to pre-pandemic levels: pundits claim the pandemic has accelerated our change to a cashless society by nearly five years.
How it works
These services are a payment processor between online vendors, on auction sites like eBay, as well as directly between businesses and customers. They charge payment processor fees for the transfer, and they come with benefits such as one-click transactions and payment security.
The providers
Like ‘buy now, pay later’ platforms, each third-party payment provider has its own quirks. Leading the way are PayPal, Stripe, Google Checkout and Amazon Payments.
What they do for consumers
Cyber-security threats are a concern for consumers who are paying for goods and services online. Third-party payment services typically offer guarantees for online security through fraud prevention and policies that block unauthorised transactions and protect customers financially from purchases that don’t turn out as expected.
What they offer your business
Third-party payment services offer you and your customers trouble-free transactions and peace of mind when it comes to cyber security. Keep in mind that, like BNPL platforms, these payment services charge fees for transactions, commonly to the seller.
Contactless payments are king
Thanks to ongoing social distancing regulations, many businesses are avoiding cash altogether and only accepting contactless payments. Products like Square and PayPal Here are becoming more and more critical, particularly for businesses who don’t have EFTPOS set up with their bank.
How it works
Similar to an EFTPOS device, Square and PayPal Here combine physical hardware with their proprietary software to create a point-of-sale system for contactless cards and devices. Depending on the provider, they enable contactless transactions with credit cards, debit cards, Apple Pay, Google Pay and more. The transactions are recorded in the system and the funds are transferred to either a bank account for Square or your PayPal account for PayPal Here.
The providers
Square and PayPal Here are the leaders in the contactless payment providers space. They elegantly combine contactless hardware with simple point-of-sale software.
What they do for consumers
Even before COVID-19 changed our way of life, contactless payments had long usurped cash. But for health and safety, contactless is now the way more and more customers choose to pay. In fact, 44% of Aussies have decreased their use of cash, and eight in ten (79%) of Australians agree contactless payments are a cleaner way to pay.
What they offer your business
Put simply: most customers are no longer carrying cash. And while we follow guidelines to keep one another safe and healthy, contactless payment technology is king.
1Source: Telstra Business Intelligence survey 2019
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