A Guide for E-Commerce Businesses – Daily Business

Buy Now, Pay Later (BNPL) didn’t burst onto the scene overnight, but it’s here to stay. What started as a nice-to-have payment option has quietly become a must-have for many online retailers. In 2024 alone, more than 360 million people worldwide used BNPL services, and this number is still growing.

This is important because BNPL doesn’t just change how people pay, it changes how they decide to buy. When shoppers don’t have to pay the entire amount up front, their hesitation is reduced. As a result, more customers end up buying and spending more money. If you still consider buy now, pay later a novelty in e-commerce, you probably miss out on sales while others benefit from it.

How BNPL Works (Without the Jargon)

BNPL may sound complicated, but it’s actually quite simple for both customers and merchants. When the customer checks out, they select a BNPL option, such as Klarna, Afterpay, or Affirm. They receive the goods now and pay later in fixed payments. The merchant still gets paid up front, just not by the customer.

Here’s what’s happening behind the scenes:

• The BNPL provider pays the merchant, typically within one to two days, minus a small fee (usually 2–6%).
• The customer pays the supplier in incremental payments, often over 4–6 weeks or longer, with interest applied to larger purchases.
• The supplier makes money through merchant fees, late fees, or interest (if applicable).

The merchant doesn’t have to chase payments or take on the risk – the supplier handles it all. And because customers experience less friction, stores often see up to 30% higher conversions and larger orders without lifting a finger.

Is BNPL Right for Your Store? (Spoiler: Not Always)

BNPL can increase conversions, but it’s not right for every store. It works best when your product prices are high enough that splitting the fees makes a real difference to your customers. If your average basket size is small—say, under \$50—BNPL fees can eat into your profits without adding much value. Younger shoppers tend to prefer flexible payment options, but if your audience doesn’t expect or need them, offering Buy Now, Pay Later (BNPL) won’t make much of a difference. It can even slow down the checkout process if not implemented properly.

The setup is something else to keep in mind. Implementing BNPL software can’t be done just by flipping a switch. API use, proper user data protection, and maintaining system stability are usual tasks. While some systems, Shopify and WooCommerce, for example, provide their own tools, other platforms may need you to work with a developer.

How to Add BNPL to Your Store (Step-by-Step, No Tech Headaches)

Adding Buy Now, Pay Later (BNPL) to your store isn’t as difficult as it sounds, but it does require some planning. Start by choosing a provider that works with your platform — some are better suited for Shopify, while others work better with WooCommerce or Magento. Read the terms carefully. Some providers charge a flat fee, while others take a percentage; those small amounts can add up quickly. Before you go live, test the entire checkout process as a customer would. Verify that the payment option is displayed correctly, and ensure that your confirmation emails include BNPL details.

What Changes After You Launch? (And What to Watch Closely)

Once BNPL is launched, the way customers shop and your store operations will begin to change. Watch for changes in return rates, as BNPL users tend to return items more frequently than regular customers. Payment delays can also impact your cash flow, as suppliers may not always pay promptly. Customer behaviour is also changing, as people are buying faster but expecting more flexibility. If you don’t track these changes, problems can snowball. Keep an eye on your margins, return processing, and payment schedules.

Final Thoughts: Build Smart, Not Just Fast

Buy now, pay later isn’t a quick fix or a magic switch for growth — it’s a tool that requires planning and regular testing. Used correctly, it can increase conversion and customer loyalty. Used blindly, it can cut into margins and complicate operations. What matters is how it aligns with your broader goals, not just how quickly it drives sales.