Fordham Group accountant Bianca Cheregi discusses the advantages of buy now, pay later services.

Australians have long been able to pay for products in instalments by way of traditional lay-by arrangements.

However, the adoption and use of electronic instalment payment arrangements has become more prevalent in recent years amongst major retailers and their customers.

This has led to the increased emergence of the ‘buy now, pay later’ (BNPL) sector.

BNPL services enable consumers to purchase goods by paying part of the purchase price at the time of the transaction and the remainder in a series of instalments.

Unlike traditional lay-by arrangements, the customer is entitled to receive the goods immediately and the merchant is paid upfront in full by the BNPL provider, less the BNPL provider fee.

Should all retailers consider adopting BNPL services in their business models? The following points present a strong case for why adding these services can assist in business growth.

Sales driver

Utilising BNPL services assists retailers in converting potential customers into paying customers by enabling their purchasing. Consumers are more comfortable making purchases knowing they have the ability, at little cost, to spread the price of the purchase over a period of time.

Some BNPL providers also assist to market their participating retailers to their database of users, opening new sales channels for retailers.

Increased transaction size

Consumers having the ability to spread the cost of their purchase over an extended period of time are highly likely to spend more money with each transaction by either purchasing more goods or higher priced items as their comfort level increases.

This can translate to an overall higher average order value for the business. 

Increased customer satisfaction

With the advent of the internet, consumers are more informed than ever.

With a constant hunger for convenience, consumers are likely to purchase goods from retailers which actively remove any barriers that restrict or hinder the purchasing process.

BNPL services have been proven to improve customer purchasing experiences, increasing the likelihood of repeat transactions.


Unlike traditional lay-by arrangements, BNPL services enable retailers to be paid by the BNPL provider at the point of initial consumer purchase.

This assists the retailer in maintaining a healthy cashflow as funds are received in their entirety much earlier in the payment process.

Additionally, inventory turnover is improved as the goods are immediately passed to the consumer, in turn reducing holding costs.

Improved B2B interactions

It’s not only the individual consumers that take advantage of BNPL offers.

SMEs have typically relied on more traditional sources of credit which have proven more complex to obtain.

Utilising BNPL services can assist business customers in making purchases, reducing risk associated with non-payment to the retailer by passing it to the credit provider.

Whilst BNPL transaction fees are typically higher than traditional bank merchant fees, providing customers with the choice to utilise BNPL generally results in happier customers, increased total sales and a healthier underlying business.

The emergence of the BNPL sector is an example of how the consumer payments landscape has changed in recent years.

Facilitated by innovative technology and adopted by a wide range of participating retailers, it is apparent that BNPL services have the potential to present participating retailers with opportunity to profitably grow their business and customer databases.

This information has been prepared by Fordham Business Advisors Pty Ltd and Perpetual Trustee Company Limited (PTCo). Perpetual Private advice and services are provided by PTCo. To view the Perpetual Group's Financial Services Guide, please click here. Fordham’s liability is limited by a scheme approved under Professional Standards Legislation. This information, including any assumptions and conclusions, is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change. It is general information only and is not intended to provide you with advice or take into account your financial situation or needs.

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