Buy now, pay later companies are being used with increasing frequency in ecommerce. Also known as BNPL companies, these plans allow customers to divide payments into specified installments rather than pay the packed amount when purchasing the item.

BNPL apps are straightforward to use, and have low profit rates and fees as well as borrowing limits that allow customers to make most ordinary purchases. This makes them an attractive alternative to borrowing cards.

As a business owner, BNPL makes things easier for your customers, and can boost your net income. With BNPL, you can propose your customers a straightforward way to make payments on purchases, while ensuring you receive the packed amount immediately. Once you recognize the benefits popular BNPL companies propose, you can decide on the best one for your needs.

What are buy now, pay later (BNPL) companies?

BNPL companies make and back an app-based form of remittance you can discover both online and in stores. In many ways, the BNPL model is similar to a borrowing card: When a customer buys products and services using the app, the business receives the remittance immediately, and the customer pays equal payments over a set period of period (often without being charged profit).

For consumers, there are a number of advantages to using BNPL for remittance. The debt servicing structure is straightforward and straightforward, and BNPL companies usually don’t fee profit or fees for users who pay on period. Additionally, most BNPL apps are straightforward to opt in to, and the approval procedure is straightforward.

A BNPL business might conduct a soft borrowing check on recent users, which won’t affect a customer’s borrowing score. Due to its ease of use, BNPL accounted for 5% of global ecommerce deal volume in 2023 and is expected to reach $452 million in deal worth by 2027.

BNPL apps can be a winning circumstance for all involved. Consumers can finance purchases they might not otherwise have been able to afford, it reduces abandoned online shopping carts on merchant sites, and BNPL companies earn fees from the merchant for processing the deal.

The buy now, pay later fine print

Unlike with borrowing cards, a buy now, pay later remittance schedule usually doesn’t require users to pay profit. And, consumers discover they are generally easier to get approved for than borrowing cards, allowing them to make large purchases with profit free payments over period.

Taking advantage of a BNPL remittance schedule won’t affect a customer’s borrowing score unless they miss a remittance. Missing payments may also outcome in late fees, and outcome in a update with borrowing bureaus.

For businesses, uncertainty is minimal, as chargebacks are often the responsibility of the buy now, pay later provider. As with any online remittance way, BNPL loans can be at uncertainty for fraud. Again, usually the buy now, pay later provider will be on the hook. However, excellent customer service habit dictates that you should receive measures to prevent and detect fraud, and engage with customers who fall victim.

⚠️ Note: As with any agreement, read the terms and conditions of any BNPL platforms you integrate with your website.

8 popular buy now, pay later companies

Using BNPL apps that have established reputations will remove some of the uncertainty for you and your customers. Here are the eight most popular.

1. Shop Pay Installments

Launched in 2021, Shop Pay Installments by Shopify is a convenient alternative for businesses already running their stores on the platform. 

The facts

• Shop Pay Installments are offered by Affirm.
• Consumers pay back their BNPL borrowing in four equal payments or monthly installments up to 12 months.
• Businesses will be subject to an eligibility check and must have Shopify Payments and Shop Pay activated.

Pros

• boost average order worth by up to 50%.
• Up to 28% fewer abandoned carts.
• Tap into Shop Pay’s 100 million+ user base.
• Consumers have flexible remittance options: four installment payments or monthly capitalization plans up to 12 months.
• Zero late fees for customers.

Cons

• Shop Pay Installments is currently only available in the United States.

2. Affirm

Founded in 2012, Affirm is available in the US at more than 320,000 merchants, and has financed over 17 million purchases.

The facts

• profit: 0%–36%, depending on the remittance schedule and user eligibility.
• borrowing term: Pay-in-four every two weeks, or pay monthly for up to 60 months.
• Fees: None.
• borrowing limit: Up to $30,000; some loans may require a down remittance.  

Pros

• Available both online and in-store.
• Multiple debt servicing structures propose a wider range of options.
• Merchants set their rates and debt servicing timelines.
• Performs a soft customer borrowing check.

Cons

• Missed payments may affect users’ borrowing scores.
• Most transactions require a borrowing check.
• Some transactions fee profit.

3. Afterpay

Afterpay launched in Australia in 2014, before expanding to the US, recent Zealand, and the UK. Over 348,000 brands use Afterpay to reach more than 24 million customers.

The facts

• profit: None.
• borrowing term: Six weeks.
• Fees: Late or missed-remittance fees can reach up to 25% of the purchase worth.
• Spend limit: Starts at around $600.

Pros

• Encourages responsible spending for students and those who haven’t built up borrowing, bringing recent consumers into the trade.
• App includes a virtual borrowing card for in-store purchases at any store—even if that store isn’t an Afterpay associate.
• A reminder characteristic helps users remain on track with payments.
• Late payments won’t affect users’ borrowing scores.

Cons

• Only one remittance structure.
• Each purchase must be approved by Afterpay.
• Not all purchases will be approved.
• Late fees can be as high as 25% of the purchase amount.

4. Sezzle

Founded in 2016, Sezzle has 13 million consumers and 39,000 energetic merchants on the platform. As a certified B Corporation (nonprofit), it offers customers the ability to reschedule payments for up to two weeks of additional period.

The facts

• profit: None for pay-in-four; 5.99% to 34.99% for monthly plans. 
• borrowing term: From two weeks to 48 months, depending on different factors. 
• Fees: Late remittance fees, rescheduling fees, failed remittance fees,  convenience fees; other fees include service fees. 
• borrowing limit: Varies depending on the user.

Pros

• Proven commitment to social and environmental standards. 
• Allows users to reschedule payments three times for up to two additional weeks.
• Users can construct borrowing with the Sezzle Up alternative, which reports on-period payments to borrowing bureaus.
• Virtual borrowing card allows for in-store payments at select retailers.
• Excellent customer service.
• Performs a soft borrowing check on users.
• Three remittance structures

Cons

• Users are subject to many different fees.

5. PayPal Pay Later

PayPal is one of the most popular online remittance processing platforms. As of August 2020, it also offers BNPL with millions of online merchants. 

The facts

• profit: None.
• borrowing term: Four payments over six weeks, or monthly up to 24 months.
• Fees: None.
• borrowing limit: $1,500 per deal for pay-in-four; $10,000 for monthly payments. 

Pros

• Familiar brand name.
• straightforward to add for merchants and customers with existing PayPal accounts.
• Integrated with the existing PayPal remittance setup.
• Covered by PayPal’s Purchase Protection, offering users an additional level of safety on purchases.
• Performs a soft user borrowing check.

Cons

• Not available for in-store use.
• Limited to Australian and US buyers and sellers, excluding those in Missouri and Nevada. Note: the product is also available under a different name in Spain, Italy, UK, and France.
• Purchases must be approved by PayPal.
• Missed payments may affect users’ borrowing scores.

6. Klarna

Klarna is one of the most well-known BNPL companies. It was founded in 2005 by students from the Stockholm School of Economics and is now available in more countries than its competitors.

The facts

• profit: None for the Pay Later in 30 Days and Pay in 4 plans; 0% to 33.99% for monthly capitalization.
• borrowing term: 30 days, six weeks, and up to 24 months (monthly capitalization).
• Fees: $7 late fees for missed payments for Pay in 4 schedule, with the potential for other fees. 
• borrowing limit: $1,000 for Pay Later in 30 Days and Pay in 4 plans; monthly capitalization options commence at $150. 

Pros

• Available both online and in-store.
• Multiple debt servicing structures propose a wider range of options, allowing customers to finance medium and large purchases.
• Available in several countries in Asia, Australia, Europe, and North America.
• Performs a soft borrowing check on users for Pay Later in 30 Days and Pay in 4 plans.
• Users can generate a single-use virtual gift card, which can be used in any online store—even in stores that aren’t Klarna partners.
• Promotes partners through app, social media, and newsletters.

Cons

• Each purchase must be approved by Klarna.
• Monthly capitalization users will undergo a challenging borrowing inquiry.
• Some fees for late payments.

7. Zip

Formerly known as Quadpay, Zip is an Australian BNPL business launched in 2013 with a straightforward concept: Make a purchase today and split the remittance into four equal, profit-free installments. Unlike other BNPL companies, customers can use Zip for both online and in-person shopping.

The facts

• profit: None.
• borrowing term: Six weeks.
• Fees: Installment fees starting at $0 to $7.50 for each remittance; late fees of up to $7.
• borrowing limit: Varies by user.

Pros

• Available both online and in-store.
• Virtual borrowing card allows for in-store purchases, even if the store does not associate with Zip.
• Notifications assist users remain on track with monthly payments.
• May perform a soft borrowing check on users.

Cons

• Extra fees. 
• No monthly remittance structure.

• Each purchase must be approved by Zip.

8. Splitit

Splitit was founded in 2012 and is a distinctive competitor in the BNPL service space. Unlike other BNPL companies, Splitit works through users’ existing borrowing cards, charging the packed purchase amount to the card over period in tiny increments.

The facts

• profit: None.
• borrowing term: Varies.
• Fees: None.
• borrowing limit: Uses customers’ existing borrowing card limits.

Pros

• Available both online and in-store.
• No applications, registration, or borrowing checks required.
• Uses customers’ existing borrowing cards, allowing them to earn rewards on purchases and construct borrowing without accruing profit.
• Users can make larger purchases without worrying about profit.
• Partnerships with Visa, Mastercard, and Stripe.
• Merchants are able to set their own qualifying purchase amounts and select between two different business plans.

Cons

• Users must have a borrowing card with sufficient borrowing to cover the expense of purchases.
• Not available with Amex cards.