Buy Now, Pay Later options have shifted from being niche options for very specific industries like furniture and appliance sales to a mainstream payment option for everything from clothing to your lunch order. Today, many major retailers offer some form of BNPL option at checkout, and its popularity continues to grow. 

BNPL’s appeal is its ability to let shoppers split purchases into installments, often interest-free, which can boost conversions and average order value (AOV) for merchants. Shoppers feel more comfortable buying when they can pay over time. This often leads people to check out when they otherwise might not, and to place orders that are larger/more expensive than they would normally consider.  

That said, simply adding whatever BNPL option sounds good to your checkout might not always go as expected. In this blog, we’ll guide you through a strategic approach so that you can assess whether a BNPL strategy fits your business, how and where to implement it, BNPL best practices, and how to avoid common pitfalls if you decide to work BNPL into your store’s payment options. 

What is BNPL, and why is it Popular?

Buy Now, Pay Later is a payment model that allows customers to buy now and pay later in installments. It usually involves an initial payment followed by subsequent interest-free payments–usually about 4 payments over a 6 to 8 week period or longer-term financing for larger purchases. 

Shoppers love BNPL because it offers everyone’s favourite combo: flexibility and instant gratification. This is exceptionally popular amongst younger consumers. In fact, a PayPal study from 2025 showed that over half of surveyed Gen Z (54%) and millennial respondents (52%) made a purchase using BNPL in the past six months.

Not only is BNPL a great way to make things more affordable, but with its quick approvals, no compounding interest and short plans, it’s often seen as an easier alternative to credit cards.

For merchants, BNPL can increase conversion rates by 20-30% and reduce cart abandonment by up to 35%. Adding interest-free installment options also tends to lift AOV (by up to 32%) because customers tend to add more items to their cart or opt for higher-priced products when they can pay in installments. 

If you’re operating in a competitive market (and who isn’t, nowadays?), offering BNPL services at checkout can be the differentiator that attracts customers seeking payment flexibility to your store. This effect is most pronounced in high-ticket categories such as consumer electronics and furniture, where the initial sticker shock is a primary cause of cart abandonment.

When Does BNPL Make Sense?

Adding BNPL to your ecommerce payment options is generally a good move, but there are still factors to consider when determining whether this payment solution will work for your business and customers. Here are a few things to consider before going all-in on Buy Now, Pay Later:

1. Average Order Value: What’s your typical price point? BNPL is most impactful for higher-priced items that might cause hesitation at checkout. If your AOV is above ~$50- $100, offering “pay-in-4” installments can reduce sticker shock. In fact, if AOV is under a few hundred dollars, short split-pay plans are usually sufficient, whereas larger purchases (>$300) may warrant longer-term installment loans. Conversely, for very low-priced goods, BNPL may be unnecessary or even counterproductive.

2. Customer Demographics: As we brought up above, Millennials and Gen Z are heavy users, but what about older customers who prefer traditional payment methods? If you don’t primarily serve a demographic that expects to see these options during the checkout process, it might not be worth implementing. 

3. Product Category and Purchase Frequency: Consider your product type: High-consideration or luxury items are prime candidates. Occasional purchases can benefit from BNPL, whereas everyday consumables or low-cost accessories might not. Offering financing on a $30 item can even feel out of place and undermine the value of BNPL entirely.

4. Profit Margins: One of the biggest arguments against BNPL is provider fees, which will eat into your margins. If you operate on thin margins, losing ~4-6% per order to BNPL fees could hurt profitability. Merchants with healthy margins or higher markups are better positioned to leverage BNPL. Also note that if you choose to offer promotional 0% APR for longer-term BNPL plans, you might subsidize some of the interest costs to the provider, essentially another margin consideration.

5. Return Rates: Do you have a high return rate in your store? If so, be careful, as BNPL fees are usually not refunded to the merchant when an order is returned. For example, if a customer buys a $500 item with BNPL and later returns it, you will have to refund the customer, but you won’t get back the fee you paid the BNPL provider. 

Take a look at what other brands in your industry are doing regarding these kinds of options. If all your major competitors provide pay-later options, not offering any might put you at a disadvantage. Conversely, if none do, you might gain an edge by being first, as long as you’ve reviewed the considerations we outlined above and don’t see any reasons not to give BNPL a shot. 

Comparing Popular BNPL Providers 

If you’ve made the choice to offer BNPL, the next step is choosing which provider(s) to partner with. In this section, we’ll compare the most popular BNPL options for ecommerce. 

Klarna vs Afterpay vs Affirm

Klarna: 

A pioneer in the space, Klarna originated in Europe but has since gone global. It offers BNPL options and serves as its own payment provider, with additional buyer protection when used to pay in full at checkout. 

Customer Experience: Offers multiple payment options like pay in 3 or 4, pay in 30 days, finance over 6-12 months, and pay in full today with buyer protection. It has its own shopping app and buyer extension as well.

Merchant Perspective: Klarna’s fees typically range from 2.99% up to 5.99% + $0.30 per transaction (fees vary by region). They often market that merchants get featured in the Klarna app directory, potentially driving new customers. Best for merchants who want a well-known global solution and flexibility in payment options.

Afterpay: 

Originally Australian and now serving North America, the UK, and New Zealand, Afterpay is a simple BNPL provider that lets customers pay in 4 installments over 6 weeks. 

Customer Experience: Generally targeted at lower to mid-priced purchases, often under $1000. Afterpay charges no interest on these short-term plans but may impose late fees for missed payments (capped, e.g., at $8) on the consumer side.

Merchant Perspective: Afterpay takes a fixed merchant fee of $0.30 and 4-6% commission on each sale. Afterpay is known for its strength in the fashion, beauty, and lifestyle sectors, attracting younger shoppers who prefer not to use credit cards. It’s best for merchants with mostly < $1000 order sizes looking for a popular pay-in-4 solution; great for increasing conversion on discretionary purchases where shoppers might not purchase without a split-pay option.

Affirm: 

Formerly PayBright, Affirm is the leading U.S.-based BNPL provider, and the underlying engine behind Shopify’s Shop Pay Installments feature. 

Customer Experience: What sets Affirm apart is its transparency: no hidden or late fees. They don’t charge customers fees for late payments, and interest (if any) is simple interest, clearly disclosed upfront. They offer monthly installments or 4 interest-free payments every 2 weeks. Payments can be made in the Affirm app or via AutoPay. 

Merchant Perspective: Affirm charges a merchant discount rate (MDR) and transaction fee. The exact amount you’ll pay is based on factors such as the chosen program option, your business size, and your risk profile (based on data they have gathered from working with other businesses). There are no setup or monthly fees. Affirm can handle high-ticket purchases, making it a great option for luxury and big-ticket retailers

Other providers worth mentioning are Sezzle, PayPal Pay in 4, and Zip, all of which offer similar payment options and fees. We recommend starting with one option to avoid clutter and confusion, and adding more providers as you get comfortable.

How to Map BNPL Touchpoints in the Customer Journey

If you’re implementing BNPL to increase your ecommerce conversion rate, the most important success factor is when and where you present the option to customers. If you’re only mentioning that you offer BNPL at checkout, many shoppers might not even realize it’s available, and at that point, they’ve already determined whether or not they can afford the item. 

To maximize impact, weave BNPL into multiple stages of the shopper’s journey. This means: 

• On product pages (PDP): When a customer is viewing an item, show an installment price option near the main price. This helps customers mentally reframe a $100 item as “$25 today.” Include a tooltip or link where they can see more info, like the payment schedule or whether or not there is any interest. 

• On the cart page, if the user has added items to the cart but hasn’t checked out yet, remind them that Buy Now, Pay Later is available. The cart page or slide-out cart can display a note like: “You can pay for this order in 4 easy installments with Klarna/Afterpay at checkout.”

• At checkout: Naturally, the checkout page must list your BNPL option as a payment method. Make sure it’s clearly visible as an option amongst your other payment providers. Consider showing the installment breakdown one more time on the checkout review step (e.g., “You will be charged $X today, followed by 3 installments of $Y each”).

Don’t just limit your messaging about BNPL to on-site pages, either! Mention it in your marketing when relevant. For example, on homepage banners (“New! Pay in 4 installments on orders $50+”), in promotional emails, and even in social media ads for big-ticket items. If you have physical stores, display signage that you offer BNPL in-store, too. 

Many retailers successfully integrate BNPL messaging into holiday campaigns or product launches to encourage higher spend (“Bundle, save and pay later with 0% interest!”).

Adding BNPL to Your Store - BNPL Implementation Guide

Whether you’re on Adobe Commerce or Shopify, adding Buy Now, Pay Later to your ecommerce store is pretty straightforward. Here’s how. 

BNPL Implementation on Shopify

If your ecommerce site runs on Shopify, adding BNPL functionality is usually straightforward. Shopify is a popular platform with many BNPL integrations readily available, including its own native solution.

For Shopify merchants in North America or the U.K., the easiest route is activating Shop Pay Installments. This is Shopify’s built-in BNPL option using Affirm under the hood. If you use Shopify Payments, you can enable Shop Pay Installments in your store’s payment settings.

To add third-party BNPL payment options to your store, the easiest way is to install the provider’s Shopify app. Some BNPLs can be activated as “Alternative payment methods” in Shopify’s payment settings. 

Typically, the steps are: sign up as a merchant with the BNPL provider to get approved and receive API keys or a Merchant ID; install their Shopify app or enable the payment method in Shopify; and configure the credentials. Shopify will then display that provider as an option at checkout.

BNPL Implementation on Adobe Commerce

Adobe Commerce is a more customizable platform, and integrating BNPL often involves installing an extension. The good news is that most major BNPL providers maintain official extensions to make this process easier. 

Similar to Shopify, find your BNPL provider’s extension in the Adobe Commerce Marketplace. Once installed, you’ll have a new payment method in your backend. In the admin panel, go to Stores > Configuration > Sales > Payment Methods and locate the BNPL provider settings. 

Enter the API keys or credentials from your BNPL merchant account to connect your store. Configure options like minimum/maximum order values for BNPL, the payment plan types to offer (if applicable), and any custom text.

Conclusion

Buy Now, Pay Later can be great for ecommerce brands, but only when it fits your products, margins, customer expectations, and overall checkout strategy. The brands that get the most out of BNPL are the ones that treat it as part of the customer experience, rather than an extra payment option buried at the final step. 

If you choose the right provider and include BNPL messaging in the right places, you can improve conversion rates, increase AOV, and make higher-ticket purchases feel far more accessible. As with most ecommerce decisions, the trick is not to do it just because everyone else is. It’s to do it in a way that actually makes commercial sense for your business.

At Blue Badger, we have experience implementing BNPL options for clients running on both Shopify and Adobe Commerce. If you’re considering this kind of payment strategy and need advice, or just need someone to get providers up and running on your store, we can help. Contact us today.