Learn The Benefits of Buy Now, Pay Later for Consumers and Retailers

Purchase now and pay later Integrations aren’t going away.


As eCommerce grows at a rate that is expected to exceed 20% this year, according to IBM’s U.S. Retail Index, vendors and marketplaces are attempting to entice customers with a shopping experience that includes an additional payment feature that will make it very easy to pay for their loaded shopping carts.

Afterpay, Affirm, Klarna, QuadPay, Sezzle, Splitit, and, most recently, PayPal Credit dominate the BNPL field (formerly BillMeLater). Despite its late entry into the market, PayPal has a natural edge as a payment gateway provider that most merchants already offer. For example, pay in 4, part of PayPal’s array of pay later solutions, is accessible to customers who make transactions ranging from $30 to $600. CVS, Revolve, Nike, Levi’s, Urban Outfitters, and Expedia are among the major brands that provide these services through their eCommerce channels.

While the buy now, pays later (BNPL) concept has been around for a while; it has received a significant boost this year. Splitit experienced 176 percent quarter-over-quarter and 260 percent year-on-year growth in Q2 of 2020. In addition, Afterpay increased its active U.S. client base from 1.9 million to 5.6 million in a year, a 219 percent increase 2,3.

The BNPL phenomenon has its origins in credit cards and old-fashioned financing programs like layaway. However, unlike its predecessors, it feels like a win-win situation for both the buyer and the store as a modern one-click payment option.


The BNPL model, which appears at the checkout, allows customers to finance lesser ticket items with no payment or just a tiny starting payment and pay the remainder later in a few installments at low or no interest rates. According to data from management consultancy Kearney4,5, one in every three U.S. consumers has used a BNPL service, while 67 percent of U.K. millennials have utilized a BNPL service. On the other hand, retailers are not at risk because the BNPL provider assumes the risk in the event of a default. Sellers pay a few cents for every transaction and 2-6 percent of the transaction value for this permission, which is more expensive than the fees charged by credit card providers.

Artificial intelligence and machine learning have enabled financial institutions to lower the risk of fraud and default. Their clients profit from this because they now better grasp the buyer’s credit profile without harming their credit scores.

The customer demographic is younger and has access to a variety of financing options.

According to a PYMNTS.com research on the BNPL industry, 87 percent of shoppers interested in the services were between 22 and 446.

Consumers, particularly millennials and Generation Z, are concerned about the debt of using credit cards. In addition, customers are more likely to take on extra debt in an uncertain economic climate. Issuers, on the other hand, are decreasing limits or discontinuing cards altogether7. With many individuals concerned about the future, BPNL services stand to benefit from the sentiment.

In any event, credit cards are only one of several credit tools available to young people.

Respondents stated they use BNPL to buy gadgets (43.65%), apparel or fashion products (36.55%), furniture or appliances (32.81%), household essentials (30.96%), and groceries (30.96%). (22.54 percent).

Customer Advantages

Customers can buy things and pay for them over flexible terms ranging from three months to several years, depending on the vendor, improving the customer experience and removing friction. They can get their thing even if they haven’t paid in full. In addition, the payments are interest-free, and the sign-up process is far faster than that of credit cards.