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Buy Now, Pay Later

Buy Now, Pay Later


Abdullah Abdelkafi


03 Apr 2021

Read time

4 Minutes



The rise of buy now pay later (BNPL) financing options have been accelerated by the undue strain on incomes for consumers.

With the ability to absorb risk for retailers by scheme issuers, considered an added allure, the two-fold uptake of BNPL was not unforeseen in these unprecedented times.

However, BNPL schemes were already popular amongst a generation of consumers that didn’t want the long term and ultimately riskier consequences of signing up to credit schemes with major financial institutions.

In fact, only 33% of millennials have a credit card with the majority of them still sticking to debit for their regular transactions. As online spending rose last year, monthly credit card spending decreased by 47% to £10 billion between February 2020 to April 2020.

In this article, we’ll break down exactly why BNPL schemes are circumventing the riskier attachment that credit card issuers provide at the checkout, and why even traditional consumers are investing in BNPL to achieve their desired experience at the checkout online.

Optimised Checkout Experience

With multiple BNPL options available to consumers through the likes of Klarna, Clear Pay, Affirm and PayPal’s pay in 3 (UK) option, these payment methods add to what is quickly becoming the potential to optimise the checkout as a standard.

Going further to reduce what has been achieved by autofill and real-time validation to entice 76% of consumers who are more likely to make a purchase when entering payment details and sensitive information at the payment stage; BNPL acts as a one-click checkout options for shoppers that either don’t have the immediacy of funds or aren’t willing to submit payment information across a numerous variety of sites.

Ultimately, BNPL sits as a contender alongside of, and works with, e-wallet fast payment options, to provide a convenient and speedy way of checking out; circumventing unnecessary data entry online.


In addition to smoothing the checkout process, the availability of BNPL options on the e-commerce stores of UK retailers have shown an increase in customer loyalty and conversions wherein sales have increased by up to 30%.

With the draw of paying for purchases over time or via instalments, customers are going beyond making that first initial buying decision and are increasing their average order value, with 58% of BNPL users spending more than other shoppers. Additionally, 36% of UK shoppers said that they’d shop again with a retailer that offered BNPL schemes at the checkout.


The demand for alternative payment methods is there, with BNPL being just one sector of this massively increasing market.

As 50% of consumers actively try to avoid entering their payment details online, the push for faster payment journeys and a streamlined checkout process has seen momentum in recent years.

With the Baynard institute adding that 28% of consumers abandon their shopping carts due to the complexities of the checkout process, a further 8% will do so when they discover their preferred payment method is not available. In fact, 56% of consumers checkout expecting a variety of their preferred payment methods to now be available to them, with 78% saying that having that choice is essential to where they choose to shop.

Liability Shift

Whilst there’s a definite benefit to consumers in using BNPL, the risk for merchants has been very ill-defined until you’re already deep into the process. The financing scheme assumes the risk for customers checking out with BNPL methods, and a chargeback cannot be initiated with a merchant, meaning that a good retailer reputation must be upheld.

Merchants and PSPs should be on the lookout for store account takeovers such as:

– Unusual Purchasing Behaviour

– Logins from a new device or unknown location

– Changes to the customer’s shipping address

Scalability to In-Store Purchases

With varying availability across the world, BNPL is transcending the online space to become available at the point of sale in-store. Notably, Klarna’s acquiring power means that this BNPL feature is available across the world via QR code and other digital means whereas Affirm – one of the US’s leading BNPL providers – is set to launch a BNPL card for the POS.

Challenges to BNPL

With the growing uptake of BNPL, the likes of Klarna have recently found themselves at the centre of the spotlight of UK press and financial regulatory bodies when it comes to the risk of increased consumer spending.

Whilst buy now, pay later schemes are already offered to customers on a risk-assessed basis, Klarna and other BNPL schemes will now be subject to FCA regulation.

Contrary to concerns about the risk associated with BNPL schemes, a key reason for using BNPL was revealed to help consumers better manage finances, with 64% of adults saying it has helped them do so.

How Does it Work?

In implementing BNPL schemes at the checkout for your customers, merchants will typically pay their BNPL provider between 2% to 8% of the order value as well as a processing fee.

To learn more about adding BNPL to your checkout contact us today!


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