In this comprehensive round-up, we will take a look at critical factors like interest rates, merchant fees, purchase limits, and more. 


What is Buy Now, Pay Later?

Buy Now, Pay Later (BNPL) is a payment option that has become one of the go-to methods for shoppers over the last few years. These plans are akin to a modern layaway plan: consumers can buy online or in-store, then split the cost up into affordable payments that span several weeks or months. However, unlike layaway, where the retailer holds the item until all payments have been made, BNPL hands the product over to the consumer right then and there. 

Numerous BNPL companies, such as Affirm, Afterpay, and Klarna, have emerged over the last few years, to the point where BNPL has become ubiquitous in the checkout process: More than 56% of American adults used a BNPL service in 2021. Shoppers are making larger luxury purchases–Apple products, designer clothing, gaming consoles, etc.–now that there are minimal risks for them.

What are the Benefits of BNPL for eCommerce Businesses?

A seamless and smooth checkout process is critical for any eCommerce business. A complicated or rigid checkout experience is one of the last sales obstacles stopping customers from completing their purchases. According to a survey done by Klarna of 2,000 consumers and 250 retailers, 36% of consumers say flexible payment options would encourage them to shop again with a brand and 27% said flexible payment options would make them more likely to spend more with a brand. As a merchant, providing your customers with multiple avenues for purchases gives them a sense of ease and flexibility.

So why partner with a BNPL company? For merchants:

      • Increase average order value (AOV) by +45%, depending on the BNPL option chosen. Although BNPL is popular for luxury goods, businesses that sell lower-priced goods will also see an increase in cart sizes when customers learn they can make smaller payments. 
      • Merchants receive the payment upfront, with the BNPL companies footing the small loan and handling financing. Regardless of whether or not the customer completes their installment plans, you as a business receive the payment from the BNPL This allows merchants to focus on other aspects without worrying about chasing customers for payments.
      • Increase your audience by offering a variety of payment methods. Millennials and Gen-zers in particular are more likely to gravitate toward BNPL options for online purchases. 
      • Increase checkout conversions by +35%. Shoppers are more likely to complete a larger purchase if they’re able to split up the payments over time. 
      • Create greater customer loyalty by offering flexible payment options. If customers can expect a hassle-free checkout process, they’re more likely to return in the future. 

With credit card interest rates on the rise, shoppers are looking for alternative ways to pay, and BNPL models are an increasingly attractive option for those looking for credit given that many BNPL providers do not charge interest or late fees. BNPL also provides the instant gratification that is sought after by younger millennials and gen-z consumers. This payment model allows them to have the things they want now while drawing out payments over time.

So what is the best Buy Now, Pay Later platform for eCommerce businesses? We compared six of the most popular BNPL providers for merchants. Note: The data from each of these companies is from their website. We have done some conversion rate testing on BNPL apps for our clients and did not see the same results stated below, but they did have positive results.

Affirm (Best for Higher Priced Goods)

Affirm has partnered with over 29,000 retailers in the US, including Walmart, Amazon, eBay, and PELOTON. Affirm’s customer network is more than 11 million shoppers in the US and they offer longer installment plans for customers. Affirm uses its own unique algorithm called Adaptive Checkout to determine and approve the appropriate loan amount for each customer. Unlike other BNPL providers, Affirm does not charge any late fees. 

      • Interest Rates: 0% on pay-in-four; 0%-30% for monthly payments
      • Merchant Fees: averages 5.99% + $0.30 per transaction–varies by business type and size.
      • Late fees: None
      • Purchase limit: Up to $17,500 
      • Payment plans: Pay-in-4 installments or monthly payments of up to 36 months


      • 85% increase in AOV
      • Large customer network
      • High purchasing limit


      • US shoppers only
      • High-interest rates for shoppers
      • Soft credit check for shoppers

Afterpay (Best for No Credit Check)

Afterpay is an Australia-based pay-in-four app popular amongst Gen Z. They were acquired by Square, a digital payment company, which makes integration for Square-reliant merchants easy and seamless. They are the go-to app for more than 100,000 merchants, particularly luxury, beauty & fashion, and lifestyle retailers like Ulta, lululemon, Anthropologie, and Urban Outfitters. The company is available in Australia, the UK, the US, Canada, France, Spain, Italy, and New Zealand 

What makes Afterpay a great option for merchants is its lack of hard or soft credit checks. People with bad credit or younger shoppers with no credit are able to make purchases through Afterpay, widening the consumer base for merchants. Afterpay also doesn’t offer strict credit limits; instead, approval for higher purchases is dependent on how long a customer has been an Afterpay user. Long-time Afterpay users are rewarded with higher purchasing limits. 

      • Interest Rates: 0% 
      • Merchant Fees: 4-6% + $0.30 per transaction–varies by business type and size
      • Late fees: $8 per missed payment or 25% of the purchase amount
      • Purchase limit: up to $1500 for responsible Afterpay users
      • Payment plans: Pay-in-4 over the course of 6 weeks, billed bi-weekly


      • +40% increase in AOV 
      • Integrates directly in Square POS & Square Online 
      • Shoppers who use Afterpay shop +50% more frequently 
      • No credit check for shoppers


      • Shopper late fees
      • Shoppers are unlikely to get approved for higher credit limits unless they’re repeat customers

Klarna (Best for Flexible Payments)

Klarna is a Swedish BNPL service with a consumer base of 147 million consumers, 450,000 retail partners, and available in 17 countries. Klarna is used by major retailers like H&M, Sephora, Adidas, and Petco. Founded in 2005, Klarna pioneered the Pay-in-4 model that can now be used online and in-store. Their star feature, the Klarna Card, allows customers to turn any purchase at any retailer that accepts VISA into a BNPL transaction. Klarna also allows users to collect rewards to be redeemed on future purchases. 

Klarna’s best feature for merchants is its flexible ways to pay. Integrating Klarna with your checkout system provides customers with three alternative ways to pay which is the highest out of our list. 

        • Interest Rates: 0% on pay-in-four; 0%-30% for monthly payments
        • Merchant Fees: averages 5.99% + $0.30 per transaction–varies by business type and size
        • Late fees: None
        • Purchase limit: Up to $17,500 
        • Payment plans: Pay-in-4 installments or monthly payments of up to 36 months


        • 85% increase in AOV
        • Large customer network
        • High purchasing limit


        • US shoppers only
        • High-interest rates for shoppers
        • Soft credit check for shoppers
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PayPal Pay-in-4 and Pay Monthly (Best for Trustworthiness)

PayPal is one of the most trusted payment providers for online shopping. Their purchase protection as well as their widespread availability makes them an attractive service for consumers.  PayPal’s purchase protection not only protects consumers, but it works to protect merchants from fraud, making it ideal for small businesses. There are also no associated merchant fees when retailers choose PayPal, the caveat being merchants need a PayPal business account to add it to checkout. From the consumer side of things, PayPal has no late fees and isn’t reported to credit bureaus. 

        • Interest Rates: 0% Pay-in-four; 9.99%-29.99% Pay Monthly
        • Merchant Fees: 0%
        • Late fees: 0%
        • Purchase limit: $1,500 Pay-in-4; $10,000 Pay Monthly 
        • Payment plans: Pay-in-4 and 6-24 month installment plans


        • No extra transaction fees
        • PayPal purchase protection


        • For PayPal users only
        • Unavailable in certain US states
        • Not accessible for merchants not integrated with PayPal

Sezzle (Best for Incentive)

Sezzle is a standard pay-in-4 BNPL platform used by more than 40,000 retailers, including  Target, Charlotte’s Web, Melt Cosmetics, and Gamestop. Based in Minneapolis, Minnesota, Sezzle operates in the U.S., Canada, Germany, and a few other countries. While it doesn’t offer much in the way of new features, it has two that are worth noting: Payment rescheduling and Sezzle Up. Unlike other BNPL providers, customers who use Sezzle are able to reschedule their payment up to three times per order. This has no effect on the merchant and only serves to act as an incentive for customers to use the service. 

With Sezzle Up, shoppers can opt to have their payments reported to credit bureaus to improve their credit history. This is an excellent incentive for buyers who might not see the value in Buy Now, Pay Later. 

        • Interest Rates: 0%
        • Merchant Fees: Unknown, though some sources suggest it is as high as 6%+$0.30 cents per transaction; $15 monthly minimum for merchants with less than $300 US of order processing volume within a 30-day period 
        • Late fees: $10 
        • Purchase limit: $2500
        • Payment plans: Pay-in-4, spread over 6 weeks


        • Available online and in-store
        • Optional credit reporting
        • Interest-free loans


        • Rescheduling fee is $5
        • Slow customer service
        • Lower purchasing limits for first-time shoppers
        • High merchant fees

Zip (Best for Availability)

Formerly known as QuadPay, Zip is another provider that uses the traditional Pay-in-4 method. Zip is capable of integration with its mobile app anywhere Visa is accepted, leading to widespread availability. Popular retailers that use Zip are Best Buy, Newegg, and FashionNova. Zip also gives customers the option of using the mobile app at any physical store that accepts Visa, even if that particular merchant isn’t affiliated with Zip.  Zip is the only BNPL provider we reviewed that charges a convenience fee. $1 is charged for each payment, so your customers can expect to pay an extra $4 per purchase.
        • Interest Rates: 0%
        • Merchant Fees: Unknown, though some sources say it ranges from  2%+$0.15 cents- -4%+$0.15 cents per transaction
        • Late fees: $5-$10, depending on the US state
        • Purchase limit: $1500
        • Payment plans: Pay-in-4, spread over 6 weeks


        • Online and in-store
        • 60% increase in AOV
        • 20% increase in conversions
        • Instant approval


        • Charges convenience fee
        • Late fees
        • Lower purchasing limits for first-time shoppers
        • Soft credit check

Are there Any Downsides to Buy Now, Pay Later?

Like any other service, there are some drawbacks to be aware of when adding BNPL to your business:

        • High merchant fees compared to traditional payment methods. Merchant fees for BNPL services typically range from 2%-6% 
        • Complicated integration depending on the eCommerce platform. While most BNPL providers promise seamless integration, this is still dependent upon what platform you’re using and the BNPL service you choose. It will inevitably cost time and money to add BNPL to your checkout process.  
        • BNPL attracts high-risk customers and encourages consumer debt. There are possible unknown economic consequences to the increase in people taking out loans they can’t afford. Many experts believe that this lifestyle of encouraging overspending is unsustainable and may do irreparable damage to the global economy. 


While there are growing concerns over the sustainability of the Buy Now, Pay Later model, it is likely here to stay, and retailers, particularly eCommerce businesses, would do well to incorporate it into their checkout process. Adding BNPL will likely increase AOV, checkout conversions, and customer retention. 

Frequently Asked Questions

How Is Buy Now, Pay Later different from a credit card?

One key difference between credit cards and BNPL services is the interest rates, with BNPL averaging lower to non-existent rates. Most BNPL services also don’t perform hard credit checks as a credit card provider would. 

Which is the best Buy Now, Pay Later platform?

We chose Klarna as the best overall BNPL app. While the merchant fees might be higher, Klarna is available internationally, increasing your consumer base.  Klarna’s flexible ways to pay ensure that there is a plan out there for every customer, and its rewards program creates loyalty, which in turn encourages users to return to your business. 

Why do Customers Like Buy Now, Pay Later?

Shoppers like BNPL because they can make larger purchases without financial hardship or taking on credit card debt. BNPL makes luxury living more attainable for the average consumer.

Greg Ahern
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