The Buy Now Pay Later (BNPL) payment model appeared in the early 2010s, as an answer to customer search for less complicated and costly payment methods than those available at that time. Huge fees and APRs of conventional credit cards underpinned the advent of an effective alternative – a BNPL service that has been burgeoning ever since.

Buy Now, Pay Later solutions allow shoppers to obtain their desired item and pay in a specific number of installments over a certain time period. The overall customer acceptance of this payment method is projected to grow further. Thus, the global transaction value of BNPL is forecasted to increase by over 2.5 times from $214 billion in 2022 to $565.8 billion in 2026.

The burst of these solutions occurs for a reason, since they offer shoppers convenience to enjoy their product right away, even if they are unable to afford it now. Noteworthy, the BNPL option is often available with little to no interest rates or extra fees, eliminating additional expenses for buyers.

Obviously, the Buy Now, Pay Later method is worth taking note of if your company seeks to keep up with your customer aspirations.

Keep reading to explore what buy now pay later means, how it can enhance your business, and how to integrate it efficiently into your ecommerce store.

Table of Contents
  1. What is Buy Now, Pay Later? How does it work?
  2. Buy Now, Pay Later Payment Options
  3. What are Buy Now Pay Later Benefits for Customers?
  4. Why buy now pay later is good for your store
  5. Core Aspects to Consider When Choosing a BNPL Provider
  6. BNPL Solution Providers: A Snapshot
  7. Conclusion

What is Buy Now, Pay Later? How does it work?

Buy now, pay later is a comparatively new payment option that gives consumers much freedom in making their purchases. The model allows extending the payment timeline, typically by dividing the overall purchase amount into multiple installments, removing the need to pay in full upfront. This approach is applicable in both online and offline stores with the purpose of granting shoppers flexibility, affordability, and convenience.

Here are several stages describing how buy now pay later works:

1. BNPL selection at сheckout

The journey starts at the checkout stage, where buyers have to select ‘buy now, pay later’ as a preferred payment method. As a rule, BNPL is available alongside conventional options like credit cards, digital wallets, and more.

2. Approval procedure

Upon selecting BNPL, shoppers may need to undergo a quick approval process. This usually involves providing some basic personal information, including name, contact details, and in some cases, a credit check.

3. Purchase confirmation

After the approval, the consumer’s purchase is confirmed, and the store proceeds with the order similarly to a regular transaction.

4. Payment plan

This is the buyer’s magic moment. Instead of having to pay the full cost upfront, the buyer can postpone the payment and divide it into several installments. As a rule, installments can span a few weeks or months, depending on the BNPL provider’s conditions.

5. Automatic deductions

Once the buyer agrees upon the offered payment schedule, they must be ready for an automatic deduction of installments on arranged dates. The installments are withdrawn from the consumer’s credit card or bank account, according to the payment method they have linked. Shoppers receive notifications about upcoming payments.

Buy Now, Pay Later Payment Options

The conditions of Buy Now, Pay Later solutions can vary significantly. Some providers require borrowers to make a down payment on their purchase, with the following division of the remaining balance into equal installments. The installments are extended over a period of time, typically 4-6 weeks.

BNPL providers may also charge additional fees for their services. Interest rates may apply to installments, late fees may be included for missed payments, and processing fees can be charged.

To give you an overall understanding of how to use the buy now pay later method, we outline the fundamental options available within the service.

  • Interest-free installments. Purchases are divided into equal payments, typically 2 to 4 installments, over a set period. Zero interest is charged, but missed payments may apply for late fees.
  • Deferred payment. The opportunity to postpone payment for up to 30 days without interest charges. 
  • Financing with interest. Some providers offer financing plans with fixed monthly payments and interest rates. The plans can span 3, 6, or 12 months. 
  • Credit card integration. BNPL services can integrate with users’ existing credit cards. The interest-free monthly payments, in this case, are charged to clients’ cards.
  • Flexible installment plans. Flexible plans allow users to choose the number of repayments and the frequency (e.g., once a week, two weeks, or a month).
  • Custom payment schedules. Some providers empower users to establish their payment schedule and adjust installment amounts. 

Providers may offer these eCommerce BNPL opportunities or their combinations. Later in the article, you’ll find examples of BNPL options and conditions granted by several prominent companies.


What are Buy Now Pay Later Benefits for Customers?

Why is buy now pay later so popular among buyers? Let’s study the concept’s benefits for shoppers in more detail.

Budget flexibility

Arguably, the most obvious benefit of BNPL is the clients’ capability to buy an item they would otherwise be unable to afford. This alternative payment method enables flexibility in budgeting by dispersing the cost into manageable parts.

Zero-interest options

Many BNPL services provide a choice of payment plans without interest fees. Therefore, these solutions can cost-effectively substitute conventional credit cards or loans.


Clear and straightforward, the BNPL process delivers a smooth consumer experience. The procedure typically includes quick approval and easy online or in-store payments. Shoppers are not exposed to a tedious application procedure like with loans or credit cards.

No effect on credit score

BNPL transactions typically don’t influence the user’s credit score, as they may not involve traditional credit checks.


In their attempt to better match consumer needs, BNPL providers work out simple terms, including the total purchase price range, due dates, and fees, and convey them clearly. Such transparency helps users make wiser financial decisions.

How to Choose Payment Gateway Explore Tips

Why buy now pay later is good for your store

Sellers can likewise enjoy significant BNPL upsides. Here are the primary benefits of buy now pay later for merchants:

Raising conversions

BNPL can spur conversion rates for retailers by minimizing cart abandonment. Can you imagine that 70.19%  of buyers on average abandon their carts? Therefore, there is much room for improving this parameter. The opportunity to postpone and spread payment is a strong motivator for shoppers to push a purchase button.

Gaining new clients

Broader payment options will naturally appeal to a broader circle of buyers. Those users who prefer installment plans over conventional credit will be likely to buy goods with eCommerce BNPL options.

Increasing average transaction size

BNPL is a tool that empowers consumers to buy more than they initially intended, creating a temptation that is hard to resist. With a deferred and divided payment, expensive products become more affordable. Furthermore, a reduced financial burden spurs impulse purchases. Finally, BNPL encourages customers to fill their shopping carts with more items. Ultimately, buy now pay later benefits retailers by elevating their revenues. 

Gaining a competitive advantage

Insufficient payment options are the second largest reason for shopping cart abandonment. BNPL empowers merchants to cut through the competition by meeting consumer expectations for flexible payment methods. Consequently, merchants will reduce consumer drop-off and elevate sales.

Extending marketing opportunities

Retailers can collaborate with BNPL providers for marketing and promotional purposes. Thus, merchants can initiate discount programs, exclusive offers, reward campaigns, and more to urge consumers to use this payment opportunity and buy more products. 

Driving consumer experience

Buy now pay later options for business are hard to overestimate in terms of customer comfort. By extending the payment and splitting the cost into parts, BNPL provides unrivaled convenience, affordability, and flexibility. Coupled with transparent payment conditions, the method conforms to overall consumer content and brings their buying journey to a new level.


Core Aspects to Consider When Choosing a BNPL Provider

To step on the way of the service’s integration, you primarily need to select a Buy Now, Pay Later solution provider. How to find a reliable firm that would suit your business and facilitate its growth? We’ve compiled a list of essential characteristics of BNPL providers to aid you in identifying the right partner. 

Keeping in mind your products, audience, and pricing, regard the following considerations when selecting a BNPL provider:

Payment conditions

The conditions of various BNPL services can range significantly. The types of fees, the number of installments, the repayment period, and many other parameters can differ from company to company. You should check those conditions against your business and pricing model to ensure that the provider’s plans will work for you.

For instance, if your average order value is high, you can opt for a provider with a longer repayment period. Otherwise, for stores with a lower average order value, it makes sense to prioritize repayments over a minimized term, with fewer installments.


Providers may charge fees for their services. Late fees, interest fees, and processing fees are some of the additional expenses a shopper may incur when using a BNPL service. Carefully check the provider’s plans and ensure to deliver the respective information to your clients. 

Here are the several kinds of fees providers can apply:

  • Late fees: A provider may charge from $5 to $30 if a shopper misses their payment.
  • Interest: Although not all BNPL companies apply this fee, some may charge interest on loans. Typical interest rates range from 10% to 30% APR.
  • Down payment: This is a part of the total cost that a borrower must pay upfront. Providers may require down payments on certain purchases. It usually takes from 10% to 50% of the total cost. The rest purchase amount is then split into installments.
  • Processing fee: Some companies apply a processing fee of $1 to $10 for each transaction. 

Eligibility requirements

Providers may check shoppers whether they qualify for using a BNPL service. The respective requirements can encompass the shoppers’ age, minimum income level, creditworthiness, citizenship, and more. For instance, Affirm welcomes users from 18 years old and those who have a valid U.S. Social Security number.

Companies may also check users’ credit history. You should be aware of eligibility requirements to ensure that your target audience can comply.

Consumer support

You will significantly ease your life and enhance your user content if you pick a BNPL provider offering decent consumer support. This means that if you encounter any technical problems, your partner will be here to address an issue. Ultimately, your business will have minimum to no downtime, while your clients will continue enjoying a smoothly performing online store.


Investigate what the internet says about your potential partners. Explore their websites, case studies, and reviews. This will grant you an overall idea of their reputation and expertise.


A vital parameter in the entire digital environment, security is paramount to your business. Favor a BNPL provider that employs robust security measures to protect your data. This way, you’ll contribute to your own confidence and clients’ trust.


The integration opportunity with your existing systems adds score to a BNPL provider. Such an integration will be precious to your business as it eases your BNPL payments management.

BNPL Solution Providers: A Snapshot

Once we have identified the fundamentals of a BNPL service, it’s time to see, how does buy now pay later work in real-life examples?

The table below summarizes the core options offered by the outstanding BNPL companies. It aims to deliver an illustrative comparison and assist in choosing a buy now, pay later provider.

ProviderBasic conditionsInterest Credit checkDown paymentLate feeProcessing fee
AfterpayA purchase can be split into four equal payments due every two weeks. NoYesNoUp to 8%0
KlarnaA range of payment options, including interest-free installment plans (usually in 4 equal payments), a "Pay Later" option where customers can delay payment for up to 30 days, and "Financing" for larger purchases with fixed monthly payments and interest rates.A plan with zero interest is availableYes0%-20%$70
SezzleA purchase can be divided into four payments, every two weeks. NoNo0%-25%10%0
PayPal Pay in 4PayPal’s BNPL service is called "Pay in 4." It offers to divide purchases into four equal payments due every two weeks. It's interest-free and doesn't charge late fees.NoYesNoNo0
AffirmAffirm provides financing for online purchases with fixed monthly payments and interest rates. The terms can vary, including 3, 6, or 12-month plans.0% for pay-in-four; 0%-36% for monthly payment plans. Yes10%-50%No$0-$10
SplititThe special thing about Splitit is that it enables customers to pay with their existing credit cards but divides the total into interest-free monthly installments.NoYes0%-20%No0
OpenpayThis provider offers high flexibility in payments. Shoppers can choose the number of repayments and the frequency (weekly, bi-weekly, or monthly). A plan with zero interest is availableYesNoUp to $90
ZippayZippay offers "Pay Later" and "Pay at Your Own Pace" options. The first is for interest-free payments over eight weeks, while the latter allows customers to set their payment schedule.NoYes0%-20%$5, $7 or $10Installment fee up to $7.5


Customer sentiments alter continually, and today, the heyday of credit cards as a payment method seems to be left behind, especially for the younger generation. To stay on a surge, merchants need to adjust to the audience’s demands, adopting alternative payment procedures. 

Buy now pay later for eCommerce is a remarkable solution that provides shoppers a smooth and easy journey they are looking for. By allowing buyers to split large costs into smaller payments and extend the payment procedure over a desired period, sellers construct a win-win situation where all parties can drive their gains. 

If you operate an eCommerce enterprise and plan to implement buy now pay later options into your website’s functionality, you should meticulously select the appropriate BNPL provider. The market is rich in firms that can become your potential partner. This article covers a range of aspects to help you answer the question “how to choose the right buy now, pay later provider.” To feel more confident on this path, you can cooperate with professional software developers who will refine your website based on your goals.

WebMeridian has over 7 years of experience in bringing innovative solutions to eCommerce organizations. We’ve already helped dozens of clients attain and exceed their purposes, and we are not going to stop. 

Contact us to discuss the project you have in mind, and we’ll help to bring it to life with maximum outcomes.

Denys Kharlamov

Business Development Manager
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