Buy Now, Pay Later (BNPL for businesses) is a rapidly growing payment solution that allows customers to purchase goods or services immediately while splitting the cost into smaller, interest-free installments over time. Originally popular among consumers, BNPL is now transforming the way businesses manage their transactions, customer acquisition, and cash flow.
For businesses, BNPL is more than just a payment method. It is a business solution that makes business customers happy, increases sales, and increases brand loyalty. But how exactly does BNPL work for businesses? It's time to figure it out, because that's what we're here for.
How does Buy Now Pay Later work?
At its core, BNP acts as a link between the business and the customer. And they are found on third-party platforms, for example, on Amazon, Klarna, Afterpay or Affirm. How does it work? Let's take it step by step.
1. Customer Selects BNPL at Checkout
During the payment process, customers choose the BNPL option instead of paying the full amount upfront. They agree to repay the cost in a series of installments, usually interest-free, if paid on time.
2. Third-Party Provider Pays the Merchant
The BNPL provider immediately pays the merchant the full purchase price (minus a small processing fee, similar to credit card transaction fees). This ensures the business receives its revenue without delay.
3. Customer Makes Scheduled Payments
The customer pays the BNPL provider according to the agreed installment plan. If payments are delayed, the customer may incur late fees or interest, depending on the provider’s terms.
4. Risk Management by BNPL Providers
Providers handle credit checks, fraud prevention, and payment recovery, minimizing the financial risk for the business.
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Benefits of Buy Now Pay Later
Buy Now, Pay Later (BNPL) is a revolution in payments. Just as people invented loans thousands of years ago, so now our lives are changing with BNPL. This solution has a number of advantages that can help businesses thrive in an increasingly competitive market.
1. Increased sales and revenue
BNPL makes it easier for customers to purchase goods or services by breaking down the cost into parts. This decision encourages customers to buy more or choose products with a higher value. Because it is psychologically easier for us to spend money "from the future" than to deny ourselves a purchase now. This is very good news for businesses, as the average cost of an order (AV) is increasing. Customers who might otherwise be hesitant and not buy the product are more likely to make a purchase.
2. Attracting new customers
BNPL appeals to a broad audience, including younger consumers like Gen Z and Millennials, who prioritize payment flexibility. In addition, BNPL has its own customer base, which they are willing to share with their partners. More potential customers means more sales.
3. Reduced cart abandonment
Refusing to pay for a shopping cart is a major problem for e-commerce. People add an item of interest to their shopping cart and never pay for it for various reasons. For example, because of the modest financial situation. BNPL offers a solution. Customers who might otherwise have left this site are more likely to make a purchase when they see a convenient payment option.
4. Improved cash flow
One of the main advantages of BNPL for businesses is immediate payment. Yes, customers pay in installments, but this does not mean that you will not receive the money immediately. The BNP service provider pays for the business upfront (minus a small fee for its services). In other words, your business has a stable cash flow. And there is no need to wait for the client to make the payment in installments.
5. Enhanced customer loyalty
By offering BNPL, you demonstrate that your business understands the needs of customers and satisfies them. Customers are more likely to return for repeat purchases if you have offered a convenient and secure payment option.
6. Competitive edge
Incorporating BNPL can set your business apart from competitors. With more consumers expecting flexible payment options, offering BNPL shows that your business is keeping up with modern trends and customer preferences.
7. Easy integration and minimal risk
BNP platforms themselves check the creditworthiness of buyers, collect payments and track down scammers. Therefore, the business has nothing to worry about. In addition, integration with BNP is very easy to implement.
8. Accessibility for all customers
BNPL can reach customers who might not have access to traditional credit options, such as credit cards or loans. This inclusivity broadens your potential customer base and caters to shoppers who prioritize budgeting.
Challenges to consider
While BNPL offers significant advantages, it’s not without its challenges.
• Processing fees: the fees charged by BNPL providers can eat into profit margins. But how you can reduce payment processing fees? We already wrote a helpful article about it!
• Dependency on third parties: businesses rely on providers to handle risk and customer payments.
• Potential for customer debt: over-reliance on BNPL by consumers can lead to financial strain, potentially affecting customer loyalty.
Can you Buy Now Pay Later on Amazon?
Yes, you can use the “Buy Now, Pay Later” (BNPL) options on Amazon. The company has its own installment payment system. And if it doesn't suit you, you, as a client or business, can use the services of third-party BNP providers.
How does Buy Now Pay Later Work on Amazon?
1. Amazon Monthly Payments
Amazon offers its own installment plan for eligible items. Only select products, such as electronics or home appliances, qualify for monthly payments. Eligibility is determined at checkout and depends on your Amazon account standing.
So, choose a qualifying item and add it to your cart. At checkout, select the monthly payments option if it’s available. Pay the first installment at checkout, and the remaining balance is automatically deducted in equal monthly installments over 3–5 months, depending on the plan.
Amazon’s monthly payment plans are interest-free, as long as you pay on time.
2. Using Third-Party BNPL providers
In addition to Amazon’s own installment plans, you can use third-party BNPL services like Affirm (available in the U.S.) to split payments.
Select “Confirm as payment method”. Most likely, the platform will start checking your solvency to understand how long you need to delay payment. Depending on your ability to pay, you can choose the payment terms, for example, 3, 6 or 12 months. Some Affirm tariff plans may include interest, depending on the terms of your agreement. Pay attention to this!
3. Using BNPL Apps (Indirectly)
If an Amazon store does not offer BNPL for your purchase, do not despair! You can use BNPL applications such as Klarna, Afterpay or Zip by creating their virtual card. You set up a payment plan for purchases yourself and use this card to pay the seller.
BNPL is changing the payment system for businesses. And what could be more profitable: customers get a convenient deferred payment, and businesses get higher sales and cash flow. If you integrate BNPL into your business model, you will stand head and shoulders above the competition. Your customers will be satisfied and come back for shopping more often. Meanwhile, the competitors will be wondering what happened!
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