Buy Now, Pay Later (BNPL)

What does buy now, pay later (BNPL) mean?

Buy now, pay later (BNPL) is a short-term financing strategy that allows consumers to purchase items and pay for them at a future date (often interest-free). Sometimes referred to as ‘point of sale installment loans,’ BNPL is becoming an increasingly popular payment option, especially for ecommerce retailers. With BNPL, customers typically make an upfront payment toward the purchase, and then take care of their balance in a series of weekly or monthly payments.

Frequently Asked Questions

  • How does BNPL make money?

    One of the most common FAQs for buy now, pay later vendors is: “How does BNPL make money?” The majority of BNPL providers make money by charging a commission to the merchants they partner with, rather than tacking on interest costs to the customer’s repayment. And since today’s consumers are tired of drowning in credit card debt and compounding interest rates, BNPL’s interest-free payments provide an attractive shopping alternative. 

    What’s more, because BNPL widgets appear right next to online shopping carts, they offer consumers a quick, one-click checkout experience. It’s this ease and accessibility that encourages customers to start shopping and keep coming back to your store.

  • Why is BNPL growing in popularity?

    The buy now, pay later payment method is growing in popularity, largely because most BNPL plans don’t charge interest — which means they're easier to get approved for than traditional credit cards or credit checks. The primary reason shoppers use BNPL services is to make larger purchases from their favorite stores. This is especially true when the entire purchase amount doesn’t fit into their budget, but they have enough to cover the down payment.

  • What companies are using BNPL?

    There are a number of companies, like Klarna, PayPal, Afterpay, and QuadPay, that offer BNPL payment plans for purchases made with participating merchants. Some of customers’ favorite brands these service providers partner with include large fashion retailers (Nike, H&M, Urban Outfitters); tech and electronics retailers (Apple, Bose, Brookstone); and global beauty brands (Glossier, Sephora, Stila).