Buy Now Pay Later — Should Your Store Offer BNPL?

## The BNPL Boom Buy Now Pay Later services — Klarna, Afterpay, Affirm — let customers split purchases into interest-free installments. The customer buys a $200 item and pays $50 every two weeks for 8 weeks. The merchant gets paid in full immediately; the BNPL provider takes the risk. ### The Case For BNPL **Average order value increases 20-30%.** When the immediate cost is lower ($50 instead of $200), customers are willing to spend more. The installment psychology reduces purchase hesitation. **Conversion rate increases 10-20%.** Customers who can't or won't pay $200 today might happily pay $50 today. BNPL removes the price barrier without actually lowering your price. **Younger demographics prefer it.** Gen Z and Millennials use BNPL more than credit cards. If your target audience is under 40, not offering BNPL means losing sales to competitors who do. **You get paid immediately.** The BNPL provider pays you the full amount at the time of purchase. They assume the credit risk and collect installments from the customer. ### The Case Against **Higher transaction fees.** BNPL providers charge 3-6% per transaction, compared to 2.9% for standard credit card processing. On thin margins, this matters. **Encourages overspending.** There's an ethical question about making it easy for people to buy things they can't afford right now. **Returns are complicated.** When a customer returns a BNPL purchase, the refund process involves the BNPL provider and can take longer. ### When It Makes Sense - Products priced **$50-$1,000** (the sweet spot for installments) - Target audience is **18-40 years old** - You sell **non-essential discretionary goods** (fashion, electronics, home) - Your average order value would **benefit from a 20-30% increase** ### When It Doesn't - Low-priced items (under $50 — installments don't make sense) - Subscription products (use recurring billing instead) - B2B sales (businesses don't use BNPL) - Ultra-thin margins where 3-6% fees eliminate profit