In recent years, when the dreaded cost-of-living crisis reached an all-time high and the after-effects of various lockdowns are still impacting daily life, the way we shop has completely transformed. The high street is dying out, towns and cities have more blank spaces than Taylor Swift and online shopping has taken over. 

Now that virtually everyone has a shopping centre worth of stores right in their pockets, it’s easier than ever to just take your phone out and make a purchase. But with energy bills rising, and housing prices rising, it’s not as simple as just paying for what you want. 

If you’re an online business or building an online store, this is something you seriously need to consider – especially if you want to reach new customers, generate revenue, increase your average order value and ultimately stay a step ahead of the competition.

Luckily, most businesses now offer the option to ‘buy now, pay later’, or BNPL. Klarna, Stripe and even PayPal give you the option to spread your monthly costs out, so the stress of affording that new fridge is made just a little bit lighter.

According to Finder, as of January 2024, 38% of Brits use BNPL services, with the service expected to be used globally by 670 million people by 2028. It’s quite clear the BNPL model isn’t going anywhere.

What is BNPL?

BNPL is a flexible payment solution you can offer your customers that allows them to buy products and spread the total cost over a period of time (or delay the payment until a particular date).

By integrating a BNPL function into your online shop, you can give your customers way more flexibility when it comes to paying for products and/or services, and cater to those who prefer not to pay the full amount upfront – offering them a more manageable way to budget for their purchases. Integrating BNPL can set your business apart from others and may ultimately drive more sales and positive customer sentiment.

Why use BNPL as a business?

With the cost-of-living crisis still affecting many, when there’s an opportunity to get a bargain or spread the cost (interest free!), then shoppers will be taking advantage.

Plus, more flexibility on payment options, compared to competitors, is naturally going to put your online store in good stead. It’s not uncommon for people to Google a product followed by BNPL or “Klarna”. And if your price point is on the higher end, you can attract customers aspiring to shop your brand that you otherwise wouldn’t if they had to pay upfront.

So, how can you use BNPL to your advantage when running an online business? 

Santa’s coming!

Cards start appearing in shops in September, sweets and chocolate line supermarket shelves and your tree is in its box just waiting to spread its branches. So how can you get your business holiday ready?

There’s a lot of competition when it comes to present buying, with stores battling it out to be the chosen one. Make sure potential customers choose you by giving them the payment options they want.

BNPL is a popular service when it comes to shopping for Christmas presents, with its usage growing in recent years following the cost-of-living crisis. So the option to spread costs is a game-changer for many. Add to that peace of mind by offering BNPL services on your online shop.

Many website building products, including our Ecommerce Website Builder and WordPress Hosting, offer the option to add plugins for Klarna, Stripe, PayPal and WorldPay, which all provide BNPL. But how do you choose which is best suited for you? We’ll give a quick rundown of the most popular BNPL services later in this post.

Abandon cart

Have you noticed that people are abandoning their carts, even if you’re offering discounts and paid ads to push sales? Something as simple as a new payment gateway – like BNPL – can give customers way more flexible options when it comes to paying for their goods online. 

If you have a physical store

Got a physical store as well as an online shop? You can still introduce BNPL across all customer contact points! They simply follow the same journey as they would online, but in person at the till.

BNPL platforms to consider

One of the most popular BNPL gateways is Klarna. However, there are many more you may want to explore. 

1. Klarna

Probably one of the most well-known options, Klarna offers BNPL options if your customers want to ‘Pay in 3’ interest-free instalments or pay in full up to 30 days after purchase. With their ‘Pay in 3’ option, the first payment is taken at the point of purchase, and any after that are taken automatically every 30 days. The 30-day option offers a sort of ‘try before you buy’, so your customers don’t pay anything until they’re happy with the product. 

They can also download the Klarna app to keep track of what they’re paying back, how much they still owe and get deals they may not have seen on a shop's website. 

2. Stripe

Stripe uses services like Klarna to support their BNPL setup. As a business, you’ll get paid in full as soon as a customer makes a purchase, but the customer doesn’t pay anything outside of their BNPL agreement.

The customer chooses BNPL at checkout, creates an account with a BNPL provider (like Klarna), chooses a repayment plan and returns to your site to purchase the product. Depending on which provider they’ve gone with, depends on what kind of repayment plan they have. For example, through Stripe, Klarna offers 3 or 4 instalments, pay in 30 days or monthly payments for up to 36 months. Or there’s Clearpay, which gives customers the choice of 4 instalments or monthly payments for up to 12 months (although this seems to only be available in the US).

So where Klarna on its own is limited to just the two payment options, using Stripe as a go-between gives you multiple ways for your customers to pay, and you don’t have to wait around for the money to come in.

3. PayPal

PayPal may already be a payment option you offer on your site, so adding a BNPL option will be easy. PayPal gives customers the option to pay in 3 instalments, over the course of 2 months. There are no late fees, no interest and no setup fees for customers, plus your customers are protected by the same Buyer Protection already offered on regular PayPal payments.

So when setting up PayPal on your ecommerce site, make sure you click the option to give customers BNPL and add messaging to the section, letting them know about ‘Pay in 3’.

4. Clearpay

Similar to Klarna, Clearpay allows you to break up your payments into 3 or 4, interest-free chunks you can pay over time. If you operate overseas, Clearpay is known as Afterpay in Australia, New Zealand, the United States, and Canada. As with any BNPL service, late payments result in a late payment fee, which is currently capped at 25% of the order value, or £36 (whichever is less), for each order of £24 or more.

How to choose the right BNPL provider

Choosing the right BNPL provider can either help or hinder your business, so careful consideration is key. In brief, here are the key elements to look for when browsing: 

  • Offer rate: High offer rates mean more customers can access payment terms instantly, leading to higher order values and conversion rates.
  • Technology and API integration: Such as real-time approvals and smooth integration onto your website
  • Flexibility and payment options: A flexible solution supports varied payment methods (such as debit, credit or PayPal)
  • Pricing. An obvious one, but affordable billing
  • Account management: So you know you can turn to your account manager for any help you may need

Here are some other factors when choosing a BNPL provider:

1. Reputation

Look at reviews from trusted sites such as Trustpilot and Feefo to see what existing customers are saying about the BNPL platform. From these reviews, you can determine any pain points the business owner(s) and their customers may have faced, as well as the positives of using said platform.

2. Ease of implementation

An easy implementation means you can start offering BNPL to your customers as soon as possible. Some platforms offer implementation through a direct API, a branded payment page, plugin and bespoke merchant portals.

3. Fraud prevention methods

No payment gateway is entirely immune to fraudsters, which is why there are robust systems in place to prevent them from getting their way.

While BNPL has the potential to increase conversions, your business may face potential risks. One of those is credit risks, where credit is granted to buyers who may not be reliable. This can lead to delayed payments or even losses, negatively affecting your cash flow.

Another risk involves fraudulent activities, like identity theft or fake invoicing, which can result in financial setbacks and harm your business’s reputation. Be sure to see how each provider handles these situations, such as through fraud detection systems and ongoing monitoring. In some instances, the provider may assume the entire credit and fraud risk as part of their service.

4. Locations

Some BNPL payment gateways may only operate in specific locations. This might not be much of an issue if you supply products domestically. But if you plan to expand into other territories, you’ll need to ensure the BNPL provider operates in them.

Get ahead of the rush

Make sure you’re ready for peak seasons such as Black Friday and the Christmas rush with BNPL. If you’re starting from scratch, consider our Ecommerce Website Builder. You don’t need to be a designer or developer to get your site looking good! Pick from one of the templates, make some edits, add your products and away you go! Plus, don’t forget to add PayPal, WorldPay, Klarna or Stripe to give your customers the option to BNPL. 

Or how about setting up your store using our WordPress Hosting? When you come to adding plugins, make sure you select Klarna. You get to choose which features you want to use, to improve the experience of your customers.

If you have any questions or just want to chat over your options, our team of experts are available 24/7 to help. Give us a call on 0333 0142 700 or send us a message via live chat.