Buy Now, Pay Later Brings Complexity to Payment Testing

Buy now, pay later (BNPL) is on the rise. As of March 2021, one survey found that over 55% of American adults had used a BNPL service at least once, and the market is expected to continue its rapid growth.

Offering BNPL can help retailers boost conversion rates and increase their average sales. While BNPL has some compelling benefits, merchants should carefully consider how it fits into the overall payment flow — and, of course, test thoroughly — before adding it as an option at checkout.

An evolution of layaway, with some critical differences

In the past, many retailers offered layaway, a payment plan that allowed consumers to purchase via installments paid over a set length of time. Many customers used layaway to buy big-ticket items at a lower interest rate than their credit cards offered. If a customer didn’t pay by the deadline, the seller kept the merchandise and refunded the partial payments.

The shift to a digital economy sparked a reimagined layaway experience. Rather than bringing goods to a special counter and paying in advance, customers can simply select a BNPL option at checkout. When you get to a payment screen, in addition to standard payment methods, there's a new choice: pay in installments.

Unlike traditional layaway, customers typically receive their goods after completing only the initial payment. With some payment providers, merchants take on interest fees for installment payments rather than the buyer.

Choose a partner or create your own payment plans?

A number of vendors offer a BNPL option: companies like Affirm, Klarna, Afterpay, Sezzle and others. Many e-commerce platforms, such as Shopify and Squarespace, have partnered up with vendors to offer integrated BNPL services to their customers. Other companies build out their own BNPL solutions and payment terms. Each approach has its own pros and cons — and special testing considerations.

How to test BNPL

Whether you use a BNPL partner or develop your own offering, you must ensure that it works properly. Make sure that you’re meeting customer expectations — and financial projections — with a comprehensive BNPL payment testing plan.

While merchants may be tempted to trust a BNPL partner to do most of the testing for them, there are scenarios a partner’s tests may not cover. For example, what happens if your customer doesn't finish paying all the installments? Does the partner cover the customer’s purchase, or does the merchant? No matter what your agreement with the partner says, you need to make sure the transactions work properly.

What happens if someone wants to return an item? Maybe a customer bought something for themselves, but then received the same item as a gift. What happens if the customer returns the item after all payments are complete versus only some of the payments? What if the item was part of a larger BNPL order — are remaining payments adjusted, or is the customer’s account credited?

What is the process like for the user? If the customer used BNPL online, can they return the item to a physical store? Do staff at the physical store understand how to issue refunds, exchanges or cancellations for BNPL purchases? Retailers must consider all the possible scenarios.

Unlike a purchase with a credit card or something like PayPal, where the transaction is almost instantaneous, validating BNPL takes time. Companies can typically test all aspects of traditional payment methods within a day or two. But, with BNPL, where payments are spread out over a period of at least four weeks, testing takes longer. Companies must wait until all payments have been collected to make sure the purchase finishes correctly. Introducing cancellations and returns can extend the timeline further. And to test things like interest-bearing BNPL loans, testing periods may extend three to six months.

While merchants can test BNPL on their own, they have to lay out money and product. In addition, they need someone to manage the process, including:

• ensuring testers make the payments

• documenting the steps along the way

• providing QA teams details on how to reproduce errors if something goes wrong.

Managing tester reimbursement also gets complicated. Applause’s crowdtesting service manages testing, bug reporting, triage, and tester reimbursement for you. Let Applause deal with BNPL headaches while you allot internal resources to other priorities.

Learn more about crucial considerations for payment testing in the webinar End-to-End Payment Testing: Everything You Need to Know.