What are buy now, pay later (BNPL) companies?
Buy now, pay later (BNPL) companies offer consumers the option to make a purchase and pay for it in installments over time, without having to pay any interest or fees. This payment method has become increasingly popular, especially among younger shoppers who prefer the flexibility and convenience it offers.
The buy now, pay later fine print
While BNPL can be a great option for both consumers and ecommerce businesses, it’s important to understand the fine print. Some BNPL companies may charge late fees or penalties if payments are missed, so it’s important to read the terms and conditions carefully before offering this payment option to your customers.
8 popular buy now, pay later companies
1. Shop Pay Installments
Shop Pay Installments is a payment option offered by Shopify that allows customers to split their purchase into four equal, interest-free payments. This option is automatically available to Shopify merchants who use the Shop Pay checkout.
2. Affirm
Affirm is a popular BNPL company that offers installment loans for online purchases. Customers can choose to pay for their purchase over three, six, or twelve months, with interest rates varying based on their creditworthiness.
3. Afterpay
Afterpay allows customers to split their purchase into four equal, interest-free payments, with the first payment due at the time of purchase. Afterpay is available to consumers in the US, UK, Australia, and New Zealand.
4. Sezzle
Sezzle offers interest-free installment plans for online purchases, allowing customers to split their total purchase into four equal payments over six weeks, with the first payment due at the time of purchase.
5. PayPal Pay In 4
PayPal Pay In 4 allows customers to split their purchase into four interest-free payments, with the first payment due at the time of purchase. This option is available to customers who have a PayPal account.
6. Klarna
Klarna offers a variety of payment options, including the ability to pay for a purchase in four equal installments. Klarna also offers a “Pay in 30 days” option, allowing customers to try before they buy and pay for their purchase a month after it’s been shipped.
7. Zip
Zip is an Australian BNPL company that offers customers the ability to split their purchase into four equal payments, interest-free. Each purchase must be approved by Zip, and customers can manage their payments through the Zip app.
8. Splitit
Splitit allows customers to pay for their purchase with an existing credit card, but split the cost into interest-free monthly payments. Splitit is available to customers worldwide and does not require a credit check or application process.
Buy now, pay later FAQ
What are the biggest buy now, pay later apps?
Some of the biggest BNPL apps include Afterpay, Affirm, Klarna, and Sezzle, all of which offer consumers the ability to split their purchase into interest-free installments.
Does BNPL help your credit score?
Using BNPL does not typically impact your credit score, as these companies do not report to credit bureaus. However, missed payments or defaults on BNPL purchases could negatively impact your credit.
Do BNPL companies check your credit history?
Some BNPL companies may perform a soft credit check to assess a customer’s creditworthiness, but this does not impact the customer’s credit score. Customers with poor credit may still be able to use BNPL, but they may be subject to higher interest rates or fees.
How popular is buy now, pay later?
Buy now, pay later has become increasingly popular, with a growing number of consumers opting for this payment method. According to a recent study, over 40% of US consumers have used a BNPL service at least once, and the market is expected to continue growing in the coming years.
With the increasing popularity of buy now, pay later options, it’s important for ecommerce businesses to consider offering this payment method to their customers. By understanding the different BNPL companies available and the fine print associated with these services, businesses can provide their customers with a convenient and flexible payment option that can help drive sales and customer satisfaction.