Nakul Lele, managing director at Deloitte Consulting LLC, shares his observations and insights on the recent surge of Buy Now Pay Later payment options for online B2C retailers.
  • First things first: Can you explain what Buy Now Pay Later programs are, for those who might not be familiar?

    Nakul Lele: Buy Now Pay Later (referred to as BNPL from here on out) is a short-term financing option with B2C retailers that breaks down a purchase into a set of smaller, no- or low-interest payments over time. This makes it a convenient, affordable, and fast option for many of today’s consumers who are systematically excluded from traditional banking, and it helps brands attain a wider reach of potential shoppers. Let’s say a customer wanted to purchase a $400 blender, for example. If that retailer offers BNPL, the customer could pay $100 per week over four weeks, rather than $400 all at once. BNPL’s popularity has surged in recent years, and it is projected to have a 43.8% compounded annual growth rate through 2030.

  • What do you think B2C retailers need to keep in mind when rolling out these BNPL programs?

    NL: BNPL has to be done the right way. While it’s understandably tempting to rush to rollout, players in the marketplace face an inflection point: put the customer first, or miss an opportunity for substantial growth. Many existing providers have failed to activate the full potential of BNPL because they have met with roadblocks such as consumers’ unhealthy financial habits, consumer lack of trust in financial institutions, and the historical financial inequities faced by multiple demographics. These challenges currently inhibit mass adoption and expansion of BNPL. Providers who can upend the status quo could see their BNPL offering drive business growth, enhance customer loyalty, and expand the accessibility of financial services to more potential customers.

  • Given the challenges you mention, how can players in the marketplace ensure safe, reliable BNPL programs for their customers?

    NL: We found that today’s winning brands are focusing on three key tenets: wellness, trust, and inclusion.

    1.     When it comes to the financial wellness of consumers, BNPL providers can play the role of advisors throughout the experience. By providing cashflow tools to consolidate multiple payment schedules, delivering insights on budgeting, and supporting customers in achieving financial goals, BNPL providers can encourage customers to save and spend more effectively. Helping to improve customers’ financial health can lead to repeat business, loyalty, and trust.

    2.     Our research on trust revealed that financial services companies often struggle to demonstrate how they care for their customers and miss the mark in communicating clearly about their motives and operations. To create trust more effectively, financial services companies (especially established banks) can apply more human language, addressing consumers’ needs. Additionally, as customers across segments crave more personalization, BNPL providers who can delight customers with offers aligned to their preferences may create stronger, more authentic connections.

    3.     BNPL has the potential to become a financially inclusive loan instrument to support groups who are systematically excluded from traditional credit and banking paths. In the United States, there are over 45 million adults who are either credit unserved or underserved. BNPL can unlock additional purchasing power for these consumers. Additionally, providers (including pure BNPL companies, tech and fintech companies, established banks, and retailers) can expand their embedded finance services beyond BNPL. Shifting the financial experience out of the traditional context removes barriers that often bar excluded groups from equitable banking, insurance, and lending.

  • Lastly, how can retailers who implement BNPL stay ahead of this nascent, ever-changing marketplace as customers’ needs and expectations evolve?

    NL: At the core, a human-centered design lens is essential to create innovative offerings that satisfy today’s customers. Prioritizing a deep understanding of customer data will help define a tailored BNPL offering that can bolster customer adoption, engagement, and loyalty. Constantly creating, reshaping, and innovating product offerings can differentiate a brand in the marketplace, attracting customers of all different needs and creating long-term value. As this type of digital payment plan becomes more and more ubiquitous, it is crucial that providers stay agile, adapting BNPL models to better complement customers’ changing needs.
Nakul Lele leads Deloitte’s Technology, Media & Telecommunications (TMT) Blockchain Consulting practice. He is responsible for growing Deloitte’s brand and market presence, leading software alliances and ecosystem partnerships, and driving internal blockchain capability development. He has implemented several blockchain solutions for TMT clients addressing use cases across supply chain traceability, intercompany settlements, cross-border payments, and digital rights management.