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business Friday 25 March 2022
What to know before your business adds buy now, pay later

By ROSALIE MURPHY of providers, including Klarna.
NerdWallet Officials cited concerns
“Buy now, pay later” is be- about how much debt
coming common at large customers are accumulat-
retailers like Target, Ikea ing, how these companies
and Macy’s. More and use customer data and
more small-business owners whether they adequately
are allowing their custom- disclose their fees and dis-
ers the ability to pay in in- pute resolution processes.
stallments, too. Buy now, pay later provid-
In fact, 55% of local busi- ers will have to adapt to
nesses use buy now, pay potential regulations, says
later online and 5% offer it Brett Worick, vice president
as an in-store payment op- of BNPL and point of sale
tion, according to a Febru- lending at First National
ary survey from payments Bank of Omaha. And as
news site PYMNTS.com. this payment method gets
If you’re thinking about of- more popular, he says buy
fering buy now, pay later at now, pay later providers
your small business, here’s will need to learn to man-
what you need to know. age the risks of these kinds
HOW BUY NOW, PAY LATER of loans, which may mean
WORKS their offerings will change.
Buy now, pay later involves Customers debate on a television selection, Friday, Nov. 26, 2021, in Indianapolis. “It’s almost like the risk is the
three parties: the customer, Associated Press stuff that we don’t even
the merchant and the buy the $400 from the customer a high-margin business, when it comes to someone know about yet,” says Terri
now, pay later provider. over time. (serving younger custom- adding one more thing to Bradford, a senior pay-
When a customer makes WHY BUSINESSES OFFER BUY ers) offers you the opportu- their cart, or choosing to ments specialist at the Fed-
a purchase, the provider NOW, PAY LATER nity to have a longer-term splurge on that purchase eral Reserve Bank of Kansas
pays the merchant in full, Buy now, pay later may value for that customer,” that they really want,” City.
minus fees. Then the cus- cost more than other pay- says Julian Alcazar, a Fed- Houston says. HOW TO CHOOSE A PRO-
tomer pays the provider ment methods, but advo- eral Reserve Bank of Kansas Buy now, pay later isn’t just VIDER
back in installments. cates for the service say it City payments specialist. for retailers. Alcazar has When shopping for a buy
Buy now, pay later trans- brings additional benefits. Buy now, pay later may seen a dentist and a me- now, pay later provider ,
actions cost merchants “We usually ask our retail also lead to more custom- chanic accept installment Bradford says “it’s not like
anywhere from 1.5% to 7% clients not to think of us as ers increasing their spend- payments in recent years. there’s a one-size-fits-all.”
of a customer’s total pur- a payment option, but as ing. That’s been the case “When emergencies hap- Buy now, pay later apps
chase amount, compared a new customer acquisi- for online sustainable cloth- pen, they don’t happen on won’t be your only options
to 1% to 3% for most debit tion channel,” says David ing marketplace Wearwell. payday,” Alcazar says. Buy — banks offer at-checkout
and credit cards, accord- Sykes, head of Klarna North Wearwell began accept- now, pay later can allow financing, too. For exam-
ing to a 2021 briefing from America. According to the ing buy now, pay later customers to get the ser- ple, First National Bank of
the Federal Reserve Bank PYMNTS.com survey, a high- payments after receiving vice they need right away, Omaha rolled out its own
of Kansas City. er percentage of millennial a Small Business Impact which means the merchant buy now, pay later service
For example, say your cus- and Generation Z custom- Initiative grant from Klarna can perform the service — last fall.
tomer splits a $400 purchase ers are interested in using in 2021. Today, custom- and get paid for it — soon- In addition to helping busi-
into four payments of $100 buy now, pay later com- ers who use Klarna spend er. nesses offer at-checkout
each. If your buy now, pay pared to respondents of about 76% more than those WHAT TO WATCH OUT FOR financing with payment
later provider charges a 5% other generations, particu- who don’t, according to In December, the Con- terms of a few months,
fee for this service, it would larly at luxury and specialty the company’s co-founder sumer Financial Protection FNBO has point-of-sale
pay you $380 upfront for stores.“If you’re a boutique, and CEO, Erin Houston. Bureau launched a probe loans with terms as long as
this transaction and collect if you’re artisanal, if you’re “It just reduces the friction of five buy now, pay later 10 years. q

China’s ZTE says probation ends after

clash with Washington

BEIJING (AP) — ZTE Corp. The company had plead- that use American proces-
said Wednesday a U.S. ed guilty the previous year sor chips and other tech-
judge has allowed a proba- to shipping equipment to nology.
tion period to end after the Iran and North Korea in The company, headquar-
telecom equipment maker violation of U.S. rules and tered in the southern city
was nearly destroyed in a agreed to pay a $1.2 billion of Shenzhen, said its pro-
clash with Washington over fine. bation ended as planned
its dealings with Iran and ZTE agreed to pay an ad- Tuesday after a federal
North Korea. ditional $1 billion, replace judge in Texas declined to
In 2018, then-President its executives and be scru- take further action.
Donald Trump barred ZTE’s tinized by U.S.-appointed ZTE promised in a statement
access to American com- monitors to regain access to make compliance with
ponents amid rising tension to U.S. technology. The laws and regulations “the Visitors walk past a display from Chinese technology firm ZTE at
with Beijing over technol- company sells smartphones cornerstone of its strategic the PT Expo in Beijing, Sept. 26, 2018. ZTE Corp.
ogy and security. and network equipment development.”q Associated Press