Benefits of Adding Buy Now, Pay Later to Shopify | Introducing Paidy and Other BNPL Services

Note: This article covers Buy Now, Pay Later (BNPL) services such as Paidy, GMO Later Payment, and NP Later Payment/atone, which are specific to merchants and customers in Japan. The information below will not be directly relevant if you are not selling in the Japanese market.

For those considering adding Buy Now, Pay Later (BNPL) payments to Shopify, this article explains the pros and cons in detail, along with the features and fee structures of the major BNPL services. BNPL is a payment method that lets customers pay after they receive their goods, and it can bring major benefits to a store's operations, such as acquiring younger customers and reducing cart abandonment.

What is Buy Now, Pay Later (BNPL)?

Buy Now, Pay Later (BNPL) is a payment method in which the customer pays for a product or service after receiving it.

After receiving the product or service, the customer must pay the amount due by a specified deadline, using a payment method such as convenience store payment, bank transfer, or payment via a BNPL service.

To add BNPL to a Shopify store, you need to contract with a payment service provider that supports BNPL, such as GMO Epsilon, Paidy, or Net Protections.

As an aside, overseas this type of later payment is called "BNPL" (an acronym for "Buy Now, Pay Later"). If you come across the term BNPL on Shopify's help pages, it's worth remembering that it refers to this kind of later-payment method.

Benefits of Adding BNPL to Shopify

The benefits of adding BNPL are as follows.

• Acquiring younger customers who can't hold a credit card (store side)
• Acquiring customers who prefer not to use a credit card (store side)
• Helps reduce cart abandonment (store side)
• No worries about personal information being leaked (customer side)
• Can pay after checking the product (customer side)
• Can pay whenever is convenient (customer side)

BNPL is a system that brings benefits to both the store and the customer.

Let's look at each in turn.

Acquiring younger customers who can't hold a credit card (store side)

Credit card payment is one of the main payment methods for EC sites, but many credit card companies set the minimum age for issuing a card at 18 to 20 years old or older. As a result, stores that only accept credit card payment are usually unable to sell to minors, but adding BNPL resolves this issue.

Acquiring customers who prefer not to use a credit card (store side)

Many adults also feel reluctant to use credit card payment. Adding BNPL benefits both the store and customers who wish to avoid credit card payment, allowing them to still make purchases at the store.

Helps reduce cart abandonment (store side)

The most common reason for cart abandonment is "the desired payment method isn't available." To prevent cart abandonment among customers who don't hold a credit card or who prefer not to use one, it's a good idea to add BNPL.

The blog article below introduces other measures for reducing cart abandonment on Shopify besides BNPL.Please use it as a reference.

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No worries about personal information being leaked (customer side)

Even customers who own a credit card sometimes don't want to enter their card details on a site they're visiting for the first time, in order to avoid the risk of card information being leaked through a cyberattack or hacking.

With BNPL, there's no need to enter credit card information, so customers can shop with peace of mind.

Can pay after checking the product (customer side)

With BNPL, customers can pay after the product has arrived. Because they can first check that the item they've received has no defects and meets their expectations, customers can shop with peace of mind.

One important point for reducing cart abandonment is "giving the customer a sense of security."

Combining BNPL with a solid returns and refunds policy can make for a very reassuring shopping experience for customers.

Can pay whenever is convenient (customer side)

As long as it's within the specified deadline, BNPL lets customers pay whenever suits them. Even if they can't prepare the funds right after purchasing, this isn't a problem as long as it's within the deadline, which increases the options available to customers when shopping.

Drawbacks and Points to Note When Adding BNPL to Shopify

Customers may miss the payment deadline

Some customers may fail to meet the payment deadline. Furthermore, for those who refuse to pay even after the deadline has passed, the store faces the risk of either taking legal action or having to write off the unpaid amount without being able to collect it.

If you plan to add BNPL, you need to accept a certain level of non-payment risk from the outset. To reduce this risk as much as possible, it's recommended to choose a provider that conducts a credit check in advance to assess whether the customer has the ability to pay.

Increased costs

Using BNPL may mean additional monthly fees or payment processing fees. In addition, BNPL is a payment method other than Shopify Payments, so a transaction fee will also apply.

Since high fees reduce the store's profits, choose a provider with lower fees if you want to minimize costs.

What is a transaction fee?

A transaction fee is a fee charged when receiving payment from a customer.

The transaction fee is waived when using Shopify Payments, but the following fees apply when using any other external payment provider.

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How to Add BNPL to Shopify

To add BNPL to Shopify, you need to set up one of the following three payment providers.

GMO Later Payment

GMO Later Payment is a BNPL service provided by GMO Epsilon.

When a customer purchases a product using GMO Later Payment, an invoice is sent to them by postcard or letter from GMO. The customer then uses this invoice to pay the amount due by the payment deadline, using one of several payment methods (convenience store payment, bank transfer, or post office payment).

GMO Later Payment Fee Schedule

Besides GMO Later Payment, GMO Epsilon can also handle a wide range of other payment types, including credit card, convenience store payment, d-Payment, cash on delivery, and carrier billing. It also allows you to manage all your payment methods from a single dashboard.

Paidy

Paidy is a later-payment service also used by Amazon, Qoo10, and other sites.

When a customer orders a product using Paidy, they can complete the purchase by entering a verification code sent by Paidy. Between the 1st and 3rd of the following month, the customer receives a notice of the amount due (by email and SMS), and pays the amount by the 10th of that month using one of several payment methods (convenience store payment, bank transfer, or direct debit).

Paidy Fee Schedule

One benefit for customers using Paidy is that when paying via direct debit or bank transfer, installment fees are waived for 3 or 6 installments. Shopify stores handling high-priced items such as home appliances may want to consider adding this service.

NP Later Payment / atone

NP Later Payment and atone are later-payment services provided by Net Protections.

NP Later Payment is similar to GMO Later Payment: no membership registration is required, and customers pay the amount due on the invoice they receive, by the payment deadline, using one of several payment methods (convenience store payment, bank transfer, or post office payment). An invoice arrives for each purchase, and payment is required each time.

atone is similar to Paidy: membership registration is required, and the billing amount is sent to the registered contact, to be paid by the deadline using one of several payment methods (convenience store payment or direct debit). With atone, purchases made up to the closing date are billed together, and payment for the whole amount is made the following month. It also offers a new later-payment option called "Tsudo Ato-Barai," which allows a billing request to be issued at the time of product shipment.

NP Later Payment / atone Fee Schedule

A Shopify App That Can Automatically Hide BNPL

After adding BNPL, you may run into situations where you want to hide it — for example, "since eGift products can't send the gift link to the recipient unless they're paid for upfront, I want to hide BNPL," or "I want to hide BNPL when a preferred delivery date has been set."

This section introduces a Shopify app that can hide BNPL under any condition you like.

RuffRuff Order Limits

"RuffRuff Order Limits" is fully localized for Japanese and is Japan's first Shopify app built on the Cart and Checkout Validation API.

By using the "Cart and Checkout Validation API," it achieves order-limit processing on the server side, something that could previously only be handled on the front end. As a result, compared with existing order-limit apps, it delivers far more robust order restrictions that are harder to bypass.

With a single app, you can implement quantity limits, amount limits, bundling restrictions, customer restrictions, and payment-method hiding.

Using this app, you can achieve things like the following.

・Hide BNPL when the total amount in the cart is ¥3,000 or more
・Hide BNPL when the cart contains a pre-order product
・Hide BNPL for guest customers only

The blog article below explains how to "hide Paidy when the cart contains a pre-order product." Please use it as a reference.

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[Bonus] Shopify Apps with a BNPL Feature

RuffRuff 予約販売

"RuffRuff 予約販売" helps reduce the lost sales opportunities that arise from being out of stock, waiting to launch a new product, or waiting for restocking. It lets you set up pre-orders on your own Shopify store with surprising ease, and register unlimited pre-order products while accepting unlimited pre-orders. It can also prevent pre-order and regular products from being ordered together, and can send restock notifications when the arrival date is undetermined.

It has also earned "Built for Shopify," Shopify's official mark of top-quality apps that meet standards for speed, ease of use, and reliability.

In Closing

Adding BNPL to Shopify can expand your business by broadening your customer base and reducing cart abandonment, but it also comes with things to weigh, such as non-payment risk and fee costs. It's important to compare the features and fee structures of services such as GMO Later Payment, Paidy, and NP Later Payment/atone, and choose the BNPL service best suited to your business model. You can also control the visibility of the BNPL option as needed, allowing for flexible operation depending on the product or situation.

Shopify also supports a wide variety of other payment methods. The blog article below introduces other payment methods you can add to Shopify besides BNPL. If you're considering adding a new payment method, please use it as a reference.

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