Should You Add a Pay Later Option to Your E-Commerce Site?

Person holding a credit card paying online.

Buy Now Pay Later option (BNPL) is the latest trend in the Internet town. According to, over a third of US consumers have used the service in the last 12 months. Those aged 35 to 44 are the most likely to ask to pay later.

Essentially, with BNLP customers shop without paying at the time of the purchase. Instead, the service provider partners up with a pay-later company that finances the purchase in the form of an interest-free loan.

Some BNPL providers have even partnered with physical stores, so the consumer can walk in, pick their item, and then pay later. Often with physical stores, the first installment is due at the time of purchase, unlike with e-commerce stores. As long as the payment is made on time, there’s no interest on the loan. The most popular buy now pay later option service providers are PayPal, AfterPay, Affirm, and Klarna in that order. FuturePay and QuadPay are other notable mentions.

Should You Add a Pay Later Option to Your E-commerce Store?

For e-commerce store owners, this is a million-dollar question. As already mentioned, BNPL opens the door to a vast, mostly untapped market that you can exploit for substantial returns. However, it does come with a few risks that many merchants may be wary of. Closely studying the benefits and drawbacks of this innovative payment approach can help you make an informed decision.

Buy Now Pay Later Pros for Small Businesses

The main advantage of pay-later services is that you can make customers out of thin air. People who weren’t even thinking about buying will find themselves filling their carts as they can pay at a later date – to the merchant’s benefit.

Three other advantages are as follows;

  • Increased average order value
    If a consumer walks into your store with $100 in their pocket intending to buy two pairs of jeans, without BNPL plans, the maximum revenue you can obtain from that consumer is $100. However, if you allow the same consumer to pick a few more items, say up to $300, and pay later, they’ll likely spend more than originally intended.
  • Improved customer experience
    An increasing number of consumers are tired of credit card interest. Unfortunately, avoiding credit card interest isn’t very easy in an increasingly cashless society. BNPL services allow consumers to solve two issues. Firstly they can escape the credit card interest and secondly they can also pay cashlessly. The result? A more enjoyable customer experience.
  • Attend to the credit-averse/credit-less demographic
    Credit card interest is just one reason some consumers don’t pay with their card. Some consumers also want to avoid using credit cards out of fear of impacting their credit score. Additionally, some may want to keep certain purchases off the credit card while others don’t have credit in the first place. Integrating BNPL to your store allows you to cater to these consumers.

Buy Now Pay Later Cons for Small Businesses

There are two main challenges associated with buy now pay later option services for small businesses. These are higher merchant fees and integration issues.

  • Higher merchant fees
    Although the creditors who bankroll BNPL services primarily make their money on the consumer side, the merchant also pays a small fee. For instance, Klarna charges merchants 3% to 4% for every transaction, on average. These fees are generally higher than what traditional credit card companies charge.
  • Integration challenges
    Bringing BNPL software into your day-to-day operations is another issue. You’ll need specialized customization tools. You’ll also need to prepare for additional updates and upgrades to keep the BNPL program running efficiently. These will require ongoing extra work and expenses on your part.


Despite the few challenges, the Buy Now Pay Later option, can offer substantial value to e-commerce merchants. Research shows your likely to see more sales, increased order values, and entry into an attractive market segment. Surely, this means it’s worth a try.

Looking for help? Tired and believing there has got to be a better way?

Let's talk about your business. With over a decade of experience leading companies and transforming lives, and a Master's degree in Org. Development and Leadership, Mike can help you find the best way forward!

Subscribe to receive my latest business tips and tactics in your inbox.

Mike Gingerich life leadership business coaching

Blog Categories

Recent Posts

Search Site
© 2012-2024    Contact   -   Privacy
magnifier linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram