BNPL for Services: Unlocking business growth with tailored payment solutions for the service industry
By Asaf Darash, CEO & Founder of Regpack (regpacks.com)
In today’s rapidly evolving business landscape with new payment fads emerging frequently, service-based companies are increasingly recognizing the need for innovative payment solutions to enhance their revenue streams, foster customer loyalty, and ensure financial stability. The transformative power of highly customizable payment plans, particularly those reminiscent of the European-style Buy Now Pay Later (BNPL) flexible payment solutions must not be overlooked. Leveraging these tailored payment options can be a game-changer for service-oriented businesses.
The Unique Needs of Service-Based Businesses:
Service-based businesses differ significantly from their product-centric counterparts, requiring specialized tools to address their distinct needs. Services are intrinsically linked to time and space, demanding unique considerations in the sales process. Unlike physical products, services exist within a specific timeframe and take place in a defined space, whether it’s a classroom, the cloud, or any other environment.
Time and space considerations necessitate tools that accommodate recurring memberships, subscriptions, classes, and events. The traditional eCommerce tools, designed for physical product sales, often fall short in meeting these requirements, lacking essential features such as time conflict management and quota management.
The Limitations of Traditional eCommerce Tools:
Attempting to adapt traditional eCommerce tools to service-based models introduces inefficiencies and compromises the competitive edge of service-oriented businesses. These tools may include unnecessary features like shipping modules, while crucial aspects like time conflict and quota management are often overlooked. The unique traits of the service market demand financial and technological tools that provide a distinct advantage, setting service-based businesses apart from the competition.
Transitioning from “Buy Now Pay Later” to Installment Payments:
The “Buy Now Pay Later” (BNPL) option, popularized by platforms like Shopify, is a common tool in the eCommerce arsenal. However, when applied to service-based businesses, the limitations of this approach become apparent. BNPL, resembling a loan structure, is more suited to physical product transactions, where ensuring continued payments after the product is in the hands of the consumer poses challenges. If a loan structure is not taken, there is a high probability that the full payment will not be issued since there is little incentive on the client’s side to do so. Therefore, credit checks are required and loan agreements are needed.
Service-based businesses, operating within predefined time and space parameters, have a unique advantage in offering installment payments. The time consideration allows service-based businesses to offer installments that are not loans but rather an auto-bill mechanism that splits the cost across time. By ordering services in advance, service providers can seamlessly integrate installment plans, eliminating the need for credit checks and risk assessments. If payments are not completed, the service is not provided or stopped, ensuring a secure and risk-free transaction for the merchant while offering an interest-free option to the client.
Increasing Revenue with Advanced Billing Methods:
As billing and payment technologies advance, customers expect seamless checkout experiences that cater to their specific needs. Service-based businesses can increase revenue by implementing advanced billing methods, such as auto-bill installment payments and a customized onboarding experience.
Regpack, an automated billing platform specializing in the service industry, has observed that organizations using their software experienced an average revenue increase of 30%. This growth is attributed to the advanced billing features designed specifically for service-based businesses. Auto-billing installment plans not only provide customers with flexibility but also contribute to improved cash flow for businesses. For instance, the Japan-Seattle Suzuki Institute and Sounds True reported significant revenue increases after integrating automatic billing into their payment options.
In conclusion, service-based businesses can unlock their full potential by embracing highly customizable payment plans tailored to their unique needs. Service-based businesses should seek payment providers that offer advanced billing features that go beyond the capabilities of traditional eCommerce tools, leading to increased revenue, improved cash flow, and enhanced customer satisfaction. By understanding and leveraging the ties between service offerings and time/space, businesses can position themselves for success in the digital age.
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