Buy Now, Pay Later- A New Face of eCommerce?

Yesha Bhatt

By : Yesha Bhatt

Buy Now, Pay Later- A New Face of eCommerce?1

Mark is a proud owner of a flourishing online jewelry store. Like other store owners, he faced a slump at the beginning of the pandemic. Customers had to prepare for rainier days. They would obviously not make extravagant purchases like an earring.  

Mark thought about this and came up with an idea. 

Instead of selling an item for let’s say $540, he, by adopting the buy now, pay later strategy, started selling it in two payments of $270.

Customers, instead of paying at once, can pay weekly, monthly, or even yearly.

Works well for both parties. 

No wonder BNPL services are seeing 200%-plus increases during COVID-19. Because there are thousands of retailers like Mark who are adopting this method. 

In this article, we will discuss in-depth about buy now, pay later services and how you can implement it in your store.

Let’s go!

Buy Now Pay Later- Definition

Buy now, pay later (BNPL) as the name suggests is a payment option that allows customers to take their desired product at home without having to pay cash at once. This service allows users to pay in installments. Usually, third-party providers like Klarna or Afterpay manage these installments. 

Are you thinking that you do offer credit card payment that is more or less the same thing? You are not the only one. Credit card is not a bad option but note that people are avoiding it because of high-interest rates. And therefore, BNPL is emerging as a powerful alternative. 39.3% of consumers use BNPL because they don’t want to incur credit card interest. So, it’s high time you reconsider the various payment options you offer. This system is good for those who do not have a credit/debit card (popular among the younger generation) and for those who want a specific repayment date.  

How to Buy Now Pay More Works?

Payment Options: Suppose your brand offers a buy now, pay later option through a third party Klarna. During checkout, a customer chooses this payment option. Klarna offers three options:

> Pay later in full after 30 days.

> Pay later Installments into 3 or 4 equal, interest-free installments.

> Finance It, splitting the cost of bigger purchases into as many as 36 monthly payments. Interest charges can apply.

And you need to pay the provider 2–6% commission plus a fixed fee for every transaction.

A Contract with Customers:  So basically, this method works by entering customers into a contract that obliges them to make the payment- both principal and interest.  It’s not like those old times when you must go chasing for the person who owes your money. It’s the responsibility of the buy now, pay later provider to get the money. BNPL providers do a soft credit card check meaning; the provider may check the credit card score of the customer before approving the application. If the score is bad, it disapproves of the application. Secondly, the providers avoid those users who have a general disregard for repaying.

Interest Rates: Talking about interest and pricing, some BNPL providers offer a consistent interest rate while some offer rates based on the purchase price. If the user fails to make the payment, he has to pay late fees or prepayment fees depending on the vendor.

Offline & Online Transactions: Most buy now, pay later online transactions are with online stores. However, some brick-and-mortar stores do offer this option. In this case; the retailer gets the user scans a qr code, the retailer receives credit from the provider, and the user pays the provider within the stipulated time.  

Let’s talk about this process from the perspective of your customer. User A likes a product from your store and clicks checkout. Here, he gets the flexibility to take the product home without having to pay the total amount. And this very idea of not giving away too much money at once is what will bring great opportunities for your business whether it’s new visitors, conversion, or sales.

BNPL Success Stories

Clean Origin is a diamond company. They opted for a 0% interest rate option by Affirm. Here’s what Hayley Anhut, the Content Marketing Manager at Clean Origin has to say, “We have been blown away by the number of customers that use the buy now, pay later option but it makes sense given that the average engagement ring purchase is over seven thousand dollars.” 

Dave Woodland, the Service Director at San Bernardino Toyota, said they have been using Sunbit since 2017 to allow customers to buy now and pay for car service. According to Dave, the process only takes about 30 seconds to approve! – “Our sales team loves being able to help their car owners out and in fact, one of our top sales advisors conducts 30% of their business through Sunbit.”

Lisa Stephenson at She’s Single Magazine uses Afterpay to allow advertising clients to purchase advertising and pay for it later in 3 small payments. Here’s what she has to say- “It has worked wonders, especially now during the COVID-19 pandemic. Many business owners have opted in for this chance to get their products featured without having to fork up $3,000 for a full-page ad in one sitting.” 

In this way, BNPL services have helped retailers and business owners across the world to attract and retain customers. 

Reasons Why Retailers Offer Buy Now, Pay Later

This trend is only going to keep growing and it’s becoming well-known among users. Do you know 37.6% of consumers have used a BNPL service? In fact, a survey found that over one-in-three respondents have already used a BNPL service to make a purchase. To cater to this demand, online stores have started implementing buy now, pay later solutions. Let’s find out why everybody is making this shift. 

Attract Millennials

Younger customers have changed the landscape of digital payments. Millennials are averse to credit and debit cards. Only 33% of Millennials actually have a credit card. Therefore, buy now pay later is a preferred choice for the younger generation. Daniel Jensen, Vice President of Product at Klarna, explains why BNPL is popular among millennials: “The younger generation want this kind of simple and flexible payment solution that suits their financial situation without forcing them into one-sided credit agreements with unfair interest rates” 

How does this matter to you? Remember you are selling online. So, your target audience is majorly the younger generation.  To attract them and to increase sales, it’s essential to implement BNPL in your online store.

Increased Sales

The major factor that is responsible for the loss of sales is cart abandonment. A lot of customers keep loading their shopping carts until they check the sum total. The shock of a good amount of cash leaving the bank account is a common reason why users abandon the cart or save it for later. The Baymard Institute found that the second most commonly cited reason for abandoned carts was the price. 

By now options address this pain point of the customers. By allowing users to pay in installments, it has a positive impact on conversion rate. PayPal found that average order values for retailers increased by 15% once they started to offer to finance. If customers have the choice of paying monthly instead of paying at once, they are likely to buy more and buy more often. As visitors increase, your sales will soar and what more you need!

Customer Loyalty

Every business aims to have a loyal customer base. Repeat customers mean a consistent revenue. BNPL services create loyal customers by offering flexibility to the users to pay at their convenience. According to statistics, 65% of BNPL users have made two purchases within six months of each other.

Increased User Experience

Delivering a positive customer experience is essential for a number of reasons- customer experience promotes loyalty, retains existing customers, increases sales, and enhances your brand image.  A totally satisfied customer contributes 2.6 times as much revenue as a somewhat satisfied customer and 14 times as much revenue as a somewhat dissatisfied customer. By providing buy now, pay later service, you offer the flexibility to shop and pay the way they wish. This enhances user experience and you in turn get repeat customers.

How to Implement Pay Later in Your Store?

Step 1: Find a BNPL Service Provider 

There are popular platforms such as Afterpay, Zip, Openpay, Humm, Payright, and Klarna who provide buy now, pay later services.

Afterpay: Customers choose it as their payment method when making an online purchase. They have eight weeks to pay the amount back in four installments, with no fees if they make all payments on time. If the payment still isn’t successful, Afterpay will incur a $10 late fee from the customers. They further need to pay $7, if they do not pay the installment in the next 7 days.

Zip Pay: After selecting Zip Pay as the payment method during checkout, users can repay either weekly, every two weeks or monthly. If the user doesn’t pay by the end of the month, Zip Pay charges a $6 monthly fee. 

Klarna: With 80 million customers in 17 countries, Klarna is one of the most popular platforms. Klarna lets users pay for purchases in four interest-free installments- first installment when the merchant confirms the order, the rest three installments are automatically charged from customers’ accounts every two weeks. If the customer misses’ payments, he has to pay a $3 late fee for orders under $100 and $7 for orders of more than $100. 

LayBuy: Users need to pay in six weekly payments. Failing to pay leads to a $10 late fee

Humn: Users can apply for up to $30,000 with terms up to 60 months. The provider charges $0 monthly fee for terms of 2.5 months or less and $8 monthly fee for terms of 5-60 months

Common features that every buy now, pay later provider offers:

Loan term: Loan terms vary depending on the provider. For small purchases, the loan terms can be a few weeks to up to six months. For larger purchases, user can pay for up to two or more years.

Purchasing power: Providers offer loans from costing as little as $35 up to $30,000. However, it varies. Repayment frequency: Customers repay the credit in monthly installments while merchants payback in four installments.

Convenience: all providers offer a smooth service. The user can apply for a lone and receive it in seconds.  Moreover, the process of application and loan management is completely online.

Wide acceptance: every provider accepts a line of credit debit cards. And the line of credit products does not expire. You can reuse the card. 

Step 2: Factors to Consider Before Choosing a Provider:

Integration: Make sure to choose a provider that integrates with your existing POS system. This will provide a smooth checkout process for the user. Secondly, the integration will reduce the need for manual work. 

Fees: Generally, buy now, pay later companies charge a fee (percentage of purchase price + transaction fee) for processing payments. Do some research on the fees of different providers and choose what suits you best. 

User base: Choose a provider that has a strong and trusted user base. A popular provider will attract more customers to your store. 

Step 3: Post-Implementation Marketing

Once you decide on a provider and implement the payment option in your store, you need to start encouraging your customers to use the method. Attract your customers’ attention by making an official announcement. You can send an email to existing customers and let them know about buy now, pay later and how it could benefit them. You can share the news on social media platforms as well. Secondly, you can spread the word by uploading informational banners or icons on your website and product pictures. Some buy now, pay later providers have directories that list the retailers who are using their payment solution. You can get listed in your provider’s directory. This way you will find new customers.


The eCommerce world is changing and so are the payment methods. More customers are opting to buy now, pay later than ever.  If you want to attract this growing audience, BNPL options are your best bet.  

Need help with integrating buy now, pay later services to your online store? Contact us at

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