A flexible technological payment solution - Rulla - has appeared on the Ukrainian ecommerce market. It is an attractive alternative to credit cards and loans for purchases worth from 2,000 to 10,000 hryvnias. Rulla's mission is to give everyone the opportunity to sell and buy online as conveniently and securely as possible.
What is Rulla?
Rulla is a new financial instrument for Ukraine, which works according to the Buy Now Pay Later model. Now Rulla offers customers of online stores to pay for purchases in installments. Users of the service get the opportunity to divide the purchase price into 3 equal payments and pay it within 2 months without interest and commissions. Payments will be deducted automatically - there is no threat of late payment if there is the necessary amount on the account.
Sellers offering BNPL service as a payment method receive the entire value of the goods sold at once and risk nothing. They also don't incur the costs associated with traditional installment payments, such as processing and collecting defaults. For an online retailer, paying for a purchase with Rulla is no different from a normal transaction.
Similar services have been operating in developed countries for more than 10 years. The most famous among them - the Swedish service Klarna - in 2019 was recognized as the most expensive fintech startup in Europe. It is estimated at $5.5 billion.
The main advantages of "Buy Now - Pay Later" payment solutions over bank credit products are the absence of interest and commissions, as well as flexible online payment options. As numerous studies show, price doubts are decisive, even when it comes to relatively small purchases.
Counting the total cost of goods in the shopping cart of an online store, as a rule, scares away about 40% of potential customers, leading to such an unfortunate phenomenon as "abandoned carts". But the option to pay in several interest-free payments on the contrary increases conversion from visitors to buyers, because it gives the opportunity to pay the right amount of money harmlessly to the budget.
What is the difference between Rulla and credit cards and bank installments?
First of all, even if there is a shortage of money, the buyer can pay for the goods in full with his own, not borrowed funds. The cost of a purchase in an online store is divided into 3 equal interest-free payments, which are deducted automatically every 30 days. The user does not need to open a line of credit (which is what credit cards represent) and manage this debt for the sake of one-off or irregular purchases.
Big Data and machine learning technologies are used for express assessment of the client's solvency, so the service is available even to clients without credit history. Another advantage of this approach is that AI-algorithms will prevent customers from spending more than they are able to pay back.
If the customer returns the goods to the store within the statutory 14 days, the first payment will be refunded and the rest will be canceled. The customer does not risk anything.
Millennials, fashion and the pandemic
Why do we even need alternative payment methods?
Economists, studying the behavior of modern consumers, agree that the youngest part of the audience has a generally negative attitude to credit and tends to refuse credit cards in favor of debit cards. They are those born between the early 1980s and late 2000s, the so-called Generations Y and Z. Much of their conscious lives were spent in the recessionary decade after 2008, when the worst effects of over-crediting culminated in a global recession.
At the same time, according to the research of the Info Sapiens agency, representatives of the youngest part of the adult population of Ukraine value prosperity, the opportunity to get new experiences and enjoy life. It is important for them to look good and make decisions independently. About 8 million people fall into this category - a fifth of the country's total population - and their numbers will grow as the younger members of Gen Z mature.
Millennials and centennials (Y and Z, respectively) make up more than a third of the world's population in 2020, and are also the most solvent audience at the moment. They are known for their commitment to new technological solutions that transform everyday things. They are the core users of BNPL services.
The boom in the delayed payment industry came with the mass introduction of this method in Fashion & Beauty retail: clothes, shoes, accessories, cosmetics - for the sake of all this, responsible consumers do not want to cut back on other expenses or increase their credit card limit. The promising segments in which the new payment method has proven itself are goods for health, home and garden improvement, hobbies, as well as gadgets and entertainment.
Such brands as H&M, ASOS, Nike, Adidas, IKEA, Crocs, Expedia Group, Samsung, Peloton, GUCCI, Ray Ban, Alibaba - a total of more than 200,000 global and local companies worldwide - are actively using payment solutions based on the "Buy Now - Pay Later" model. Today, this payment method is even available for car purchases and luxury hotel bookings.
Reports from retailers that implement Buy Now Pay Later services show strong growth in such indicators as average purchase amount, number of conversions, new and repeat purchases. In addition, the practice of many brands has proven that it is easier for people to decide to make a purchase in an unfamiliar store if they are given the opportunity to pay for it in installments.
The pandemic and lockdowns that the world faced in 2020 led to an intensification of the tendency. On the one hand, much more people started to purchase online due to the difficulty of visiting offline stores, and on the other hand, the unstable financial situation felt by residents of almost all continents played a role. Even if the funds are enough to pay in full, splitting a substantial amount into several payments is a way to stretch a major expenditure over time without compromising on other needs. As a result, online shopping and new technologies are being embraced by an ever-wider range of users.
Why would a business benefit from using Rulla?
Summarizing the above, we can highlight the main advantages that are noted by brands that cooperate with payment service platforms of the "Buy Now - Pay Later" format.
- The website Rulla.com with promotions and offers of partner stores itself serves as a means of attracting a loyal, solvent audience to the seller's store, significantly expanding the customer base.
- Rulla reduces the risks of both sellers and buyers, as it protects both parties: the store sends the goods after receiving full payment, and the client pays for the goods in full after receiving them.
- Small businesses using Rulla's capabilities are able to compete with big brands, attracting an interested audience and reducing their own risks.
- Visitors to the online store are more likely to convert into customers thanks to the ability to pay in installments. The possibility to use interest-free installments in Fashion & Beauty encourages to buy more and more often, even if the current funds are insufficient. For the premium sector, this means more sales of expensive products without discounts that "cheapen" the brand.
- Customers who use Rulla are more likely to buy again. Studies of similar services show that customer satisfaction is higher for those that use them. Buy Now Pay Later solutions are preferred by an intelligent and solvent audience, not prone to late payments and impulse purchases. By gaining their trust, you can expect brand loyalty in the future.
- The service's analytics gives sellers the opportunity to better understand their customers' behavior, optimize the cost of attracting them, and plan actions and budgets based on the data they receive.
- Finally, it's another online payment option that benefits both sides of the transaction. The simplicity and predictability of the service for customers, the ability to flexibly use it according to personal needs, and the absence of additional fees improves the experience of customer interactions with the store.
How to add the option to pay in installments to your website?
Vendors are connected to the Rulla service via API. This allows you to integrate this payment method into any ecommerce platform.
If you want to give your customers the opportunity to use Rulla when paying for goods, fill out an application on the site.