‘Buy Now Pay Later’ (Complete Guide)

‘Buy now pay later’ is now a massive market. Massive as in trillions, not billions. For reference, the entire US GDP is about $25 trillion in one calendar year.

Every business opportunity with a large pot up for grabs attracts new entrants.

New buy-now-pay-later players are entering the industry to cash in on the booming trend.

It’s huge, and it’s spreading across all major continents.

What’s happening in BNPL

Here’s what’s been happening in the buy-now-sell-later market just recently:

– Revolut, one of Europe’s largest virtual banks, has announced that it plans to enter the ‘buy now pay later’ market.

– PayPal has paid $2.7 billion for the acquisition of Paidy, a Japanese ‘buy now pay later’ platform.

– Goldman Sachs entered a deal to buy GreenSky, a ‘buy now, pay later’ firm that arranges loans for large one-time purchases such as cosmetic surgery and construction projects. The GreenSky acquisition is part of Goldman’s effort to do more consumer, main street banking.

– Monzo, a major virtual bank, has announced plans to enter the BNPL market.

– Scalapay, a major European player in the buy-now-pay-later market, has raised $155 million.

Australia & Africa: Zip, an Australian BNPL provider, has acquired Payflex, a South African counterpart.

– BNPL is spreading beyond US/Europe: Pace, a Singapore-based buy-now-pay-later provider, has raised $40 million in Series A funding.

– BNPL is being adopted by B2B firms: Slope, a company that offers buy-now-pay-later for B2B, raised $8 million.

– Google is dabbling with BNPL: Brian Freiesleben reported that Google is testing the concept of showing a $0 price tag for products that offer a buy-now-pay-later option.

– Microsoft acknowledges BNPL growth: Microsoft stated that BNPL is “most popular with Gen Zs and millennials and is currently the fastest-growing e-commerce payment method globally.”

Pay later and be proud

Bloomberg reported on a TikTok craze involving Klarna, another buy-now-pay-later company.

Younger consumers are increasingly using these platforms and they’re proud of it.

One reason is many younger shoppers don’t qualify for credit cards.

Buy-now-pay-later companies say they rely less on traditional credit scores and reports and in some cases don’t use them at all. Doing so allows them to approve more consumers.

Shoppers gain the ability to buy things even without cash on hand. This translates into higher sales for retailers.

Many market research firms, the buy-now-pay-later market to get up to the $1 trillion mark by 2026.

How can small entrepreneurs capitalize on this trend?

If you want to increase your conversion rates, adding a buy-now-pay-later option could be a good place to start.

Things become more affordable if they can be paid for over time rather than all at once.

If you sell on Amazon, this option should appear on your dashboard soon. If you use Shopify, you already have Shop Pay Installments.

What this means for you

Are you planning to add buy-now-pay-later to your store? Google may “force” you with their $0 incentive if you don’t.

If you’ve tried to sell more expensive items in the past and weren’t successful, now might be a good time to try again.

Paying in installments has never been easier for the average consumer than it is right now.

If you’re selling in countries other than the US and Western Europe, there’s a good chance that a dominant player will emerge and enable this option. The future of the BNPL market appears to be bright.

How do you pick a Buy-Now-Pay-Later (BNPL) provider?

In March 2021, 56 percent of Americans used a buy-now-pay-later service.

By comparison, in July 2020 that figure was 38 percent.

Yep, the BNPL market is growing that fast.

But not all BNPL providers are created equal

Some companies appeal to Gen Zs while others appeal to professionals and to older audiences that have more disposable income.

As a company, which one do you pick?

BrandTotal may be able to help you decide.

They have analyzed thousands of paid social media campaigns from three major BNPL providers:

Here are some highlights from their analysis:

Klarna targets Gen Z

50 percent of Klarna ads were seen by people aged 18-24.

Affirm targets professional millennials

They spent a massive 64 percent of their budget on Twitter and LinkedIn.

However, only 11 percent was spent on Facebook and Instagram.

Afterpay is focusing on Facebook and older adults

Afterpay spent 53 percent of its ad budget on Facebook, and 78 percent of its target audience is over 35.

So maybe Klarna isn’t the best BNPL choice for selling expensive suits to professionals with high levels of professional income.

Similarly, if you sell expensive backpacks to TikTokers, they might not be that familiar with Afterpay.

So, on the general price spectrum: Afterpay ($$$) > Affirm ($$) > Klarna ($)

Top Players in Buy-Now-Pay-Later

Affirm has partnered with Amazon.

As a result, people will soon be able to buy products on Amazon in installments.

PayPal acquired Paidy, a Japanese BNPL platform, for $2.7 billion.

If you sell in the Asian market, look for some interesting BNPL news from PayPal going forward.

Square recently acquired Afterpay, a major BNPL provider, for $29 billion.

We expect Square to more tightly integrate buy-now-pay-later functionality into their platform in the near future.

BNPL comes to Apple

People love splitting things: restaurant checks, Netflix accounts…

And of course, payments.

Now Apple’s doing splits: The company announced the release of their own Buy now, pay later (BNPL) platform at the Worldwide Developers Conference (WWDC).

It’s called Apple Pay Later, and it’s available in the US wherever you find Apple Pay.

No action needed: Apple says there’s no work needed from the developer or merchant side, since payments can be managed through the Apple Wallet app.

Additionally, Apple released Apple Pay Order Tracking, which sends receipts and tracks orders in the Wallet app. It’s already integrated with Shopify.

Why we care: BNPL can significantly increase your conversion rate, so now’s a good time to notify your iOS customers.

For example, you might send customers a pop-up notification or display the feature as a payment option if they’re visiting from an iOS device.

Probably won’t be long before we see custom extensions for Apple Pay Later on Shopify and other platforms…

Did you know…?

Approximately 20 percent of people worldwide have used buy-now, pay-later loans.

And approximately 60% plan to use them within 2 years.

BNPL and Recurring Subscriptions

It seems like buy-now-pay-later (BNPL) is becoming a de facto method of paying for everything.

Afterpay, one of the top three buy-now-pay-later providers in the United States, is now allowing customers in the US to pay in installments for subscriptions. This means, stuff like gym memberships, entertainment subscriptions, or online services.

Why this is a big deal

Most BNPL providers only support one-time purchases.

This change will shake things up, allowing you to accept payments in installments for recurring purchases as well as for digital items.

And the best thing: as long as people pay on time, they will not be charged interest fees.

Could be a win for all parties involved (which, of course, is necessary to make it become the norm).


These features will roll out in the US and Australia in early 2022.

It will also be free for customers who pay on time.

What this means for you

If you sell monthly subscriptions for physical or digital items, this can be a big deal.

Adding a BNPL payment option can increase your conversion rates anywhere from 5% to 99%+.

Microsoft Edge & BNPL

BNPL is coming to your (not-so-favorite) browser, Microsoft Edge.

Microsoft has partnered with a company called Zip to provide a BNPL option at the browser level.

How it will work

When Edge users are on a checkout page, they will notice a ‘buy now, pay later’ option with Zip.

Users can then choose to pay in four installments over the course of six weeks.

The BNPL option will only appear for purchases ranging from $35 to $1,000.

The buy-now-pay-later option will be available by default to all users in Microsoft Edge release 96.

What to expect after this gets released

We wouldn’t be surprised if Shopify/WooCommerce plugins emerge soon that detect Microsoft Edge browsers and prompt users to pay in installments.

BNPL works

Allowing people the option to “buy-now-pay-later,” on your website can boost conversion rates by 20-30%.

And we all know in e-commerce that anything with a double-digit effect is definitely worth paying attention to.

BNPL by country

Merchants are acting quickly to add this feature to their checkout pages, and almost every payment processor is jumping into the trend. Heard about the latest partnership between Stripe and Klarna?

Buy now pay later removes the resistance that stops the customer from transferring the money from their account to yours.

Today, it can be a trump card if you sell items above $100.

However, in the next few years, ‘buy now pay later’ will likely become the norm, aka every store will have it.

If you’re looking to add this feature to your store, at the moment this is how main countries are served:

  • US: PayPal Pay in Four, Afterpay, Affirm, Klarna.
  • UK: Afterpay, Klarna, PayPal.
  • Canada: Afterpay.
  • Australia: Afterpay, Klarna, PayPal.
  • New Zealand: Afterpay.
  • France and Germany: PayPal.
  • Europe: Klarna is the main player here, not for all countries though. However, when integrated with Stripe, there is a larger pool of countries that can access it.

As you can see the big names are only operating in the main markets.

And this is probably due to the difficulty of adapting to local laws.

However, what we noticed is that local operators are joining the trend, so if your country is not on the list it doesn’t mean BNPL isn’t on the way or already there.

Lastly, these things change so quickly with this, so use this list as a starting point.

BNPL vs Credit Cards

The buy-now-pay-later industry is killing credit cards: 4 out of 5 shoppers turned to BNPL in order to avoid credit card debt.

No brakes on this bandwagon

According to another recently published report, BNPL will be the fastest-growing e-commerce payment method through 2030 in the US and Canada.

How to adapt: Fortunately, accepting BNPL as a payment method is becoming easier for e-commerce marketers.

Shopify, for example, already has a “Shop Pay Installments” option. Your e-commerce platform may have a similar option too.

If your e-commerce platform doesn’t offer BNPL integration, you can always type “BNPL providers [ the country where you sell ]” in your favorite search engine, and you’ll probably find companies that can help.

Will buy-now-pay-later end well?

Buy-now-pay-later means more consumer debt.

While debt helps stimulate demand, it’s a suppressant when it has to be paid back. You’re not only borrowing from a company, you’re borrowing from your future self.

Consumer debt – whether that’s housing, student loans, credit cards, autos, speculation on financial assets, etc. – can cause problems if allowed to get out of hand.

All companies in the buy-now-pay-later space need to remember what kind of business they’re getting into. It can be a dangerous one.

It also means consumer watchdogs and regulators are likely to become increasingly involved in the space.

BNPL and inflation

No more impulse buys: According to the latest Adobe Commerce research, inflation and high costs could prevent shoppers from spending big during the holidays.

And those who do buy are going to be picky:

  • 76% plan to study online reviews before buying products offline.
  • 61% of shoppers say recommendations and personalized offers make them more likely to buy.
  • Nearly half said that they’re more likely to purchase if the retailer offers a Buy-now-pay-later (BNPL) option.

Holiday blues: The upcoming holiday sale could be one of the most challenging in recent years… and trustworthy brands are the ones most likely to thrive.

What you can do: Focus on making product descriptions detailed and credible. Also, go big on testimonials, reviews, and user-generated content (UGC).

Finally, consider adding a BNPL feature so your users can split payments.

Your customers may feel more comfortable buying if they know a purchase won’t empty their checking accounts.


Amidst tightening economies and regulations, the Buy now, pay later (BNPL) companies are struggling to stay afloat in DTC.

… So they’re looking at other businesses: BNPL startups are rising in B2B, and for good reason.

The global business payments market is worth $125T—more than double the size of the global consumer payments market.

More money, fewer problems: Plus, BNPL for businesses offers several other attractive advantages, like…

  • Higher average ticket sizes, which promise higher fees for BNPL companies.
  • More growth potential, quicker paths to profitability, and less risk.
  • More flexible payment options, including 30, 60, and 90 day payment terms.
  • A less regulated market.

Why we care: The expansion of BNPL to the B2B market could open fresh conversion opportunities for marketers in services and B2B.

Being able to offer additional payment options or split payments could help to accelerate the growth of your own brand or venture.

Definitely a trend to keep an eye on.

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