Buy Now, Pay Later (BNPL) solutions in eCommerce

Buy Now, Pay Later (BNPL) services have emerged as a powerful alternative to traditional credit cards, allowing consumers to split purchases into manageable installments or defer payment for 30 days. Unlike conventional financing options, BNPL solutions typically provide interest-free payments when paid on time, making them particularly attractive to younger shoppers seeking financial flexibility without the burden of credit card debt. BNPL providers conduct soft credit checks to qualify consumers, ensuring it won't negatively impact the customer's credit score. Additionally, they typically don't report payments for pay-in-four loans to the credit bureaus.

The journey of BNPL solutions began decades ago with similar programs in brick-and-mortar stores, but the concept has evolved dramatically in the digital era. In just a matter of a few years, companies like Klarna, Afterpay, and PayPal have revolutionized this space, perfectly integrating with online shopping experiences.

The numbers behind BNPL's growth support this phenomenon. According to a study by European Retail Banking Radar 2023, 64% of Polish consumers have used this form of payment, placing Poland among the European leaders in BNPL users. Globally, the BNPL market is growing dynamically. In 2022, its value was USD 105.15 billion, and in 2023, it increased to USD 155.79 billion.

Given these market trends, let's explore the key benefits that encourage online businesses to implement BNPL solutions in their eCommerce stores.

Benefits of implementing BNPL solutions in eCommerce

Increased sales

One of the main advantages of implementing the BNPL solution is increased sales and, at the same time, reducing the number of abandoned carts. Also, the availability of a deferred payment option can convince undecided customers and encourage them to choose more expensive products.

Building customer loyalty

Secondly, stores that offer flexible payment options are perceived as more customer-oriented, which helps build long-term relationships. When customers have positive experiences with BNPL services, they are more likely to return for future purchases. Additionally, satisfied customers often become brand advocates, recommending the store to friends and family, particularly highlighting the convenient payment options.

Attracting new customers

The BNPL option is especially valuable when eCommerce businesses prepare for high-traffic seasons like Black Friday or the Christmas holidays. 

Improved cash flow management

BNPL companies usually transfer the full payment amount to merchants immediately while taking on the risk of customer payments. This ensures stable cash flow for businesses while offering payment flexibility to customers.

Apart from the points mentioned above, implementing BNPL in eCommerce offers other benefits that can significantly impact sales results, customer satisfaction, and the store's market position. These advantages make BNPL solutions increasingly important in today's competitive digital ecosystem. Now, let’s describe the current leaders in the market.

Popular BNPL Lenders on the market

Most ‘Buy Now, Pay Later” services operate similarly, checking your credit score to qualify the customer and determine the spending limit. BNPL credit services typically split the remaining balance into three payments scheduled every two weeks or simply allowing to pay in full after 30 days. Most offer instant approval during checkout and can provide virtual cards compatible with digital wallets like Apple Pay. 

AfterPay

Let's begin with Afterpay. This solution quickly spread across worldwide markets, including Australia, New Zealand, the United States, Canada, and several European countries (where it operates as Clearpay). The main feature of AfterPay is splitting the payment into four installments. However, for purchases starting at $400, Afterpay provides 6-month or 12-month payment plans with interest rates between 6.99% and 35.99%. Spending limits begin at around $500 and increase gradually over time.

Fees: Afterpay charges a $10 late fee for orders under $40. For orders over $40, you'll be charged 25% of the installment amount.

Klarna

Klarna is a Swedish fintech company that provides BNPL services and other financial solutions. Founded in 2005, it's now one of the largest BNPL providers globally. Klarna is a comprehensive BNPL solution that offers splitting the payment into four installments, paying after 30 days, and financing for larger payments over 6 to 36 months, which includes interest charges. In such cases, customers pay between 19.99% for standard purchases up to 24.99%, depending on the financing duration and other factors.

Klarna evaluates each purchase individually by making automated approval decisions rather than setting fixed spending limits.

Fees: Klarna's late fee is $7, excluding larger payments with individual interest rates

PayPal Pay in 4

PayPal, as a leading payment solution worldwide, also joined the BNPL race and introduced the “Pay in 4” option. As the name indicates, This BNPL option allows customers to split the cost of an order between four interest-free payments every two weeks. PayPal's Pay in 4 option is available for purchases between $30 and $1,500 at checkout.

Nonetheless, if the payment isn’t made in time, PayPal will charge a late fee based on the deferred payment amount. 

Apart from these three solutions, AllegoPay is also worth mentioning. It is a BNPL solution for the Allegro marketplace that operates mainly in Poland. This handy solution instantly grew in popularity, offering flexible repayment periods of up to 30 installments. Such a possibility certainly increases website traffic, especially during Christmas online purchase and other occasions like Black Friday.

Leverage “Buy now, Pay Later” with advanced payment service providers

While planning to implement BNPL options on the eCommerce website, businesses can connect it with many other payment methods (e.g., BLIK in Poland)  by integrating the eCommerce platform with payment service providers (PSP). This way, websites can offer multiple payment options that are easily integrated with one payment solution. Let’s take a look at some examples. 

Mollie

Mollie is a leading payment service provider, offering a secure and regulation-compliant payment infrastructure. Its user-friendly interface and straightforward implementation make it particularly suitable for new eCommerce websites. The platform features comprehensive analytics, providing detailed transaction monitoring and revenue tracking. While Mollie integrates seamlessly with major eCommerce platforms through pre-built solutions, its services primarily focus on European markets. However, it already powers over 250,000 businesses. 

https://bitbag.io/blog/advanced-sylius-payment-service-provider-integration-based-on-syliusmollieplugin-example

Adyen

Adyen is a global payment platform supporting omnichannel transactions across mobile apps, websites, and physical stores. Apart from “buy now, pay later” options like Klarna, It processes international credit cards and local payment methods like Boleto (Brazil), iDEAL (Netherlands), and BLIK (Poland). The platform offers instant fund transfers, flexible debit/credit capabilities, and centralized transaction reporting. Adyen integrates with major eCommerce platforms, including Sylius, through a drop-in implementation feature.

https://bitbag.io/blog/the-payment-gateway-for-sylius-adyen

How can BNPL be successfully implemented in the eCommerce store?

Now, let’s browse the crucial steps in implementing BNPL solution in the eCommerce store. Each step requires our attention and should not be overlooked.

Is BNPL right for your target audience?

Start of with key question: Would your customer base use the deferred payment option? Consider your target demographics' age range and shopping behaviors, as BNPL is particularly popular among millennials and Gen Z shoppers. Analyze your average order value, as BNPL tends to increase conversion rates for purchases between $100-$1000.

What are the cost and feed for an eCommerce business?

Solutions like Klarna and Afterpay offer straightforward integration options for businesses, allowing them to add BNPL payment buttons to their checkout process. While customers benefit from installment payments, merchants receive the full payment upfront. However, businesses should carefully consider associated fees before implementation.

Klarna's merchant fees typically range from 3.29% to 5.99% of the transaction amount, plus a fixed fee of $0.30 per transaction. Afterpay also charges merchants a fixed fee of $0.30 per transaction, along with a variable commission fee ranging from 4% to 6% of the transaction value.

Keep it mind that the fees may vary depending on the country, region, business size, and many other factors. Typically, individual agreements are tailored to specific business cases; therefore, this number should be treated as approximate.

Integrating the technology with eCommerce

Next, make sure the chosen BNPL provider can seamlessly connect with the eCommerce platform via the plugin. To do so, ensure that there are available integrations for your eCommerce platform that connect it with the BNPL solution. For example, Sylius can integrate with Klarna via KlarnaPaymentsPlugin or SyliusMolliePlugin.

Shopware, in turn, can integrate with Klarna by downloading KlarnaPayments from the official store.

Optimize the purchasing journey with BNPL

Last but not least, BNPL options should be strategically placed throughout the customer journey. Display payment options early, such as on product pages and in the shopping cart, to influence purchasing decisions before checkout. Include clear messaging about installment amounts and ensure BNPL buttons are prominently visible at checkout. Also, A/B testing should be implemented to determine optimal placement and messaging that drives the highest conversion rates.

Wrapping up

As BNPL solutions grow in popularity day by day, the eCommerce industry is experiencing a shift toward more personalized payment plans and innovative payment options. Merchants who implement these solutions now position themselves ahead of this transformation in digital commerce, meeting contemporary consumer preferences for flexible, transparent payment options. The key to success will be choosing the right provider and optimizing implementation while staying compliant with emerging regulations. With its rapid adoption and many benefits, BNPL loans are set to become a standard feature in eCommerce stores. 

<div class="rtb-text-box is-blue-50">Are you planning to transform your store and implement BNPL solutions? Contact us for a free consultation.</div>