Buy now, pay later platforms
‘Buy now, pay later’ (BNPL) platforms – such as Afterpay and Zip– have exploded in recent years. In fact, according to our Telstra Business Intelligence survey, Around a third (29%) of consumers use them1.
And you may have noticed they’ve spread far beyond online stores, too. You’ll find them in a whole host of bricks-and-mortar retail as well as in-person service businesses, from hairdressers to trades, essential services such as dentists, and even the local butcher.
How they work
Essentially built on a credit model, these platforms front the payment to the business on behalf of the customer. The customer then has to repay the amount within the terms they’ve agreed to with the platform, not the business, and usually in regular instalments. Although they were initially online only, these platforms are now accessible both online and in-store through dedicated smartphone apps or by logging in at the checkout stage.
The players
There’s a growing list of players in this space, each with variations on the pay-by-instalment model. While Afterpay and Zip lead the pack, look out for Humm, OpenPay, Limepay, Klarna, Splitit and more.
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 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 services
With more than 7 million Australian shoppers, PayPal is the biggest player in the third-party payment services 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 they work
These services are a payment processor between online vendors, on auction sites like eBay, as well as directly between businesses and customers. They charge a fee for the transfer, and they come with benefits such as one-click transactions and payment security.
The players
Like ‘buy now, pay later’ platforms, each third-party payment service differs slightly. 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 can help offer you and your customers easier transactions. Keep in mind that, like BNPL platforms, these payment services charge fees for transactions, commonly to the seller.
Contactless is king
Now that social distancing regulations are commonplace, 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.
How they work
Similar to an EFTPOS device, Square and PayPal Here offer a combination of physical hardware and software to create a point-of-sale system. Depending on the device, 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 players
Square and PayPal Here are the leaders in this space. They elegantly combine contactless hardware with 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.
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