Buy Now, Pay Later

August 25, 2022

Buy now, pay later is a technology that allows e-commerce stores to improve their conversion rate by giving their customers an option to pay for a product or service in instalments. Collectively, the companies that offer these services are known as Buy Now Pay Later companies or ‘BNPL’ for short. These companies have grown increasingly popular in recent years as they offer a simpler solution to online financing.

BNPL solutions were created as an alternative to credit cards and other forms of financing, allowing customers to purchase your products and then pay in a way which is more tailored to their preferences. These solutions are frequently offered to customers with low to no interest rates.

How is it evolving globally?

BNPL is still a fairly new concept globally but has been derived from instalment payments, which have been around for a while in various countries around the world. These new arrangements differ from the more traditional instalment setups, but the concept remains relatively the same.

We have seen rapid adoption of BNPL in places like the United Kingdom, Australia, and even North Africa and the Middle East. It is expected that the global volume of BNPL will double by 2025. In contrast, the adoption of BNPL products in the United States has been relatively slower. Nevertheless, the usage has increased dramatically due to factors such as the pandemic and the rising living costs,

The benefits for users

Customers have been increasingly drifting away from traditional credit cards since the start of the COVID-19 pandemic, with reasons such as high-interest rates, depleting credit limits, and poorly managed incentive schemes adding to the problem. The downfall of credit cards opens the door for other payment methods like BNPL.

It’s clear that customers are more likely to make a purchasing decision if there are 0% interest rates associated with the cost. But not all BNPL companies offer 0% interest, there are providers that may have some additional fees and others that have clear interest rates.

But BNPL options often provide customers with a cheaper payment option than credit cards which rely on exorbitant interest rates and late fees to generate revenue. Furthermore, given that payment approvals are virtually instant, BNPL offers a simple and flexible payment alternative for customers who are looking for payment options that are more personalised to their needs.

Why should your online store offer BNLP?

Increasing conversions is the main obstacle businesses experience when it comes down to generating more revenue. On average 70% of customers that place items into their shopping carts end up abandoning them before checking out. This can be linked to the user experience during the checkout process, if customers can’t easily pay for your products, then they will most often leave your online store.

BNPL will also minimise the perceived value of a higher ticket product because instead of seeing the whole price, a customer is presented with an option to pay in split sums. You can retain a whole new audience of buyers by simply offering different ways for your customers to make purchases on your e-commerce store.

Having this option on your e-commerce store will increase your customer’s average order cost. This means that by granting your customer more spending freedom, less friction is created. They will have the opportunity to buy higher priced items and multi-buy so you can start to generate more revenue.

When customers are given the option to pay for products or services in instalments it reduces post-purchase regret. This is when a customer has had second thoughts about a purchase they have made. So your customers will be happier with the purchasing decision which will lower the number of poor reviews and refunds you receive.

BNPL Providers

BNPL services can be a useful tool for your customer to spread the cost of their purchases. Today, there are quite a few schemes and payment plans to choose from. Again, your online business can benefit from the addition of these services as they will help to increase average order spend and overall conversion. We’ll be sharing what are some of the most popular BNPL providers and how they work.


Klarna is one of the most popular options for BNPL services used by retailers such as ASOS and JD Sports. They offer three different payment structures for those who decide to use the service. The first option is to ‘Pay in 30 days’ which gives shoppers a 30 day window to complete their payment. ‘Pay in 3’ allows shoppers to spread out the cost of their purchase into 3 equal instalments.

Lastly, Klarna offers a financing option which is similar to the payment options provided by credit cards. It allows payments to be split into monthly instalments over 3 to 36 months. This plan, however, will charge interest fees for the service. If payments are not met on time, regardless of the payment plan, Klarna will block you from using its services until the debt is settled and this will also most likely affect your credit score.


With Clearpay your customer will be able to split their purchases into 4 equal instalments, with the first taken during checkout and the remaining 3 collected automatically over 2-week intervals. Because of Clearpay’s simple payment plan offering, they do not charge any interest fees as long as the payments are made on time. Late payments will result in a late fee.

This service is a great option for younger audiences as it uses smart credit limits to make sure customers will be able to pay for their purchases. First time users may only be approved for 1 order at a time, after which your customer’s payment history will be taken into account when approving multiple orders. Similar to Klarna, Clearpay is provided in most online retailers.


The service has grown in popularity with over 20 million customers worldwide. Afterpay is a great option for younger audiences as it uses smart credit limits to make sure customers will be able to pay for their purchases. All attempted purchases are subject to approval using smart credit limits, highlighting the reliability for people with limited financial resources.

Afterpay sends reminders so that payments are less likely to be missed but late fees can be as high as 25% of an order amount. However, no fees will be charged if all scheduled payments are met. Much like Clearpay, Afterpay’s payment plan works in 4 instalments. The initial payment will be made at checkout and the following 3 are collected over 2-week intervals.   Afterpay has now become part of Clearpay.


Splitit works alongside your customer’s existing credit cards to help them pay for larger purchases in more manageable chunks. The convenience of already using your own credit means that purchases are simple to process with no applications of credit checks needed.

This integration with your existing credit cards means you can still earn any points and rewards. Splitit offers monthly payments ranging from 3 to 24 instalments with no interest charges or late fees. They also offer an option for users to pay off their instalments early.


This household name among consumers offers a BNPL service which focuses on smaller online purchases and is a great option for shoppers that are looking to manage their payments. Users must be approved to use this service, when the BNPL option is selected at checkout users will be taken through to an application which will be assessed instantly.

PayPal offers a pay later option which users can pay back in three separate instalments. The first payment is taken upon checkout and the remaining two instalments will be deducted from your PayPal account in the subsequent months.


Shophumm is a BNPL service that has its roots in Australia and much like PayPal, they require users to fill out an application form where the service approval will be assessed upon completion. They will perform a hard credit check for all new users and all payments can be paid off early.

Fixed sum loans are dependent on each retailer’s tailored set of loan terms which can be checked through a quotation on the Shophumm website. The payments are then made over the agreed terms established at the time of purchase, with the initial payment due at the time of purchase.

Zip Payments

Zip’s payment plans are spread across four equal fortnightly payments and like Shophumm, additional payments can be made earlier without any extra charges or fees. Zip Payments also has no extra cost for users as long as all payments are made on time.

If a scheduled payment is failed to be made then users will be charged a £4 late fee and a further £4 charge will be made for every week the payment is outstanding. The is a cap of £20 for the late fee but if payments are continued to be avoided then the user’s details will be passed onto collection agencies which will negatively impact their credit score.