The Guide to Buy Now Pay Later in E-commerce

The Guide to Buy Now Pay Later in E-commerce

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In the last couple of years, a new phenomenon has exploded in the eCommerce business sector known as the BNPL or Buy Now, Pay Later. And ever since its arrival on the scene, it has only grown in popularity. 

BNPL services allow customers to purchase goods in exchange for paying the money in either installments or a later date with no additional charges and no interest rate. 

In this guide, we’ll look into what Buy Now, Pay Later is for the eCommerce space, how it is beneficial, how to choose the right BNPL solution for your business, and how it is advantageous to an eCommerce business.

What is Buy Now Pay Later for eCommerce?

Buy Now, Pay Later or BNPL is a solution for a point-of-sale financing aspect that has gained traction in recent years, especially among the newer generations. Emerged in early 2010 as a way to address the financial pain points- particularly the ones regarding credit cards that had high fees and APRs.

According to Insider, these exorbitant fees influence the customers to look elsewhere for payment methods, thus boosting the success and popularity of BNPL. 

Now that the world tackled the COVID-19 pandemic, financial burdens and stress have been exacerbated like missing payments and declining credit limits. This is made the option of Buy Now, Pay Later a favored payment method. Thus, as an alternative to credit cards and other payment options, BNPL is designed to encourage customers to purchase their products and pay in installments over time. And these solutions are often offered to customers without hidden fees and little to no interest fee.

Thus, the rapid growth and success of BNPL have led to the solutions being eagerly implemented by eCommerce businesses to gain that edge in the market. 

How Does BNPL Work?

It is simple- at the checkout, the customers will have the option to receive their product as soon as possible. And they can either pay the full price for it for 30 days or a more flexible plan, in small installments over a period of time. 

They typically make three or four equally spaced payments, taken from their payment card. Additionally, there are no extra fees or interest- provided they make the payments on time. 

  • Buy Now, Pay Later payment options

This may vary from country to country but most Buy Now, Pay Later solutions to offer your customers three options:

  • Pay Later in full after 30 days
  • Pay Later in installments of 3 or 4 equally spaced payments
  • Finance it by splitting the cost of larger purchases into as many as 36 monthly payments. But here, interest charges can apply. 
  • The Buy Now, Pay Later checkout experience

Now, imagine this- A customer finds an item they like, adds it to their cart, and proceeds to checkout. This is your standard customer journey and experience. But once they get to the payment process, a surprise awaits them. 

Along with the traditional payment methods like credit and debit cards, and eWallets like Amazon Pay or PayPal, they’ll see Buy Now, Pay Later payment solutions. 

This presents the customer with a flexible purchase plan that they are very likely to appreciate. Thus, Buy Now, Pay Later enhances the customer experience at the checkout. 

  • Pay Later at the point of sale

In some countries, customers can order a physical or virtual Buy Now, Pay Later card that allows them to purchase now and pay later to the retailers who do not offer this option. 

The payment for these purchases is charged to their account with the opportunity to be paid in 30 days or through financing. 

Mostly Buy Now, Pay Later transactions are easier to be done with online retailers, it is quite common for brick-and-mortar stores to also offer these solutions. Here, the customer generates a QR code from their BNPL app which is to be scanned at the point of sale. And the retailer gets the credit and the customer can pay later 

By choosing how and when they pay, you are boosting the spending power of the customers, allowing them to decide their financial schedules. 

Why Do Consumers Like Buy Now, Pay Later?

As Buy Now, Pay Later payment method grows in popularity, eCommerce businesses have to understand why customers prefer BNPL and how can the businesses themselves take advantage of it:

  • Credit card use is on the decline

Since the beginning of the COVID-19 pandemic, or even before that, customers have been preferring other payment methods instead of credit cards with high-interest rates. Other factors like declining credit limits and unenticing rewards programs also impact negatively.

Thus, the use of credit cards is at an all-time low. 

And this decline in the use of credit cards opens a space that proves to be an opportunity for an alternative payment option like Buy Now, Pay Later. 

  • It’s a more affordable way to finance purchases

Buy Now, Pay later offers a more affordable payment method since they have limited fees and lower interest rates, unlike credit cards that take money from the customers due to high-interest fees and other additional fees like late fees.

  • Buy now, pay later is a more convenient and flexible way to buy

There are customers who are skeptical about credit cards and don’t carry cash either, here BNPL offers them a convenient and flexible payment solution. 

Buy Now, Pay Later as a solution is multifaceted; if you are currently purchasing an item, payment approval is done in an instant or if you are looking to purchase something for a later date, it allows you to pay upfront to ensure delivery to be on time, without any payment hassles.

How Using BNPL Options Benefits Retailers

Retailers want to get paid right away, doesn’t matter if their customers wanna spread out the payment. Some Buy Now, Pay Later solutions will transfer funds immediately to the retailer upon the purchase. 

Algorithms are set in place that allows the solution providers to assume the credit risk for both the retailer, by paying them even if the customer defaults, and the customer. 

This is a reliable solution because no matter what happens, everyone is protected. 

There are some more specific benefits that can be enjoyed by the retailer if they integrate a BNPL solution: 

  • Attracts new customers

If there is a problem that the online retailers can’t seem to shake off it is the “try before you buy” approach that is quite popular among the customers. It gives them that experience of shopping for items in a brick-and-mortar store where they get to feel the material and interact with the product before purchasing it. 

BNPL specialists offer a great chance to make this approach workable in the online space through features like free returns and dedicated support staff. Therefore, the businesses using Buy Now, Pay Later can lower the entry barriers for customers and give them that flexibility they desire when they are making a purchase. 

It is easy to interpret free returns as a factor that renders loss for the business, but they are becoming essential in the eCommerce business industry.

UPS, one of the leading delivery services in the States, highlights that 66% of customers check return policies even before purchasing. And according to Insider Intelligence, more than 50% of online shoppers will not make a purchase from an online store that has strict return policies. 

eCommerce businesses that use returns to the advantage to build a better relationship with their customers have higher chances of succeeding.

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  • Better customer experience

It is true that Millennials and Gen Z, the newer generations, love browsing, shopping, and seamless delivery service along with an exceptional shopping experience- these are their demands and it is the same as everyone else’s. 

If the eCommerce business wants the younger generations as their customers, then they need to provide them with a platform that will satiate their demands. This is a point of focus that takes priority over reward programs, loyalty strategies, or any other additional benefit. 

Ensure that the basics are up to par and that the tasks on the platform can make them feel customer delight. And BNPL helps in that. 

  • Increased sales

One of the main reasons, Baymard Institute states for cart abandonment is the price. 

If a huge chunk of money leaves your bank account or if there are high-interest rates on your credit card, it becomes a challenge to purchase a big-ticket item. 

Here, BNPL has (in part) a positive impact on the conversion rates. Offering your customers the choice of payment in installment encourages them to complete their purchase, thus reducing the number of card abandonment. 

  • Higher customer lifetime value (LTV)

Since Buy Now, Pay Later gives the customer more flexibility and control on what and how they purchase, it is a win for them. This attracts customers, especially of the newer generations like Millennials and Gen Zs, and has them repeatedly visit and purchase. Thus converting higher average basket sizes and conversion rates. 

A positive purchase is crucial for customer retention and these positive experiences will ensure that they revisit your eCommerce store over and over again. Furthermore, once they are aware of the Buy Now, Pay Late payment option you offer, they are highly likely to come back and purchase a big-ticket item from you. 

How to Choose the Right Buy Now, Pay Later Provider

When you are looking for a Buy Now, Pay Later solution provider that works for your business, you have to first look at the items you sell, their pricing, and who your customers are. 

Once you have analyzed these aspects, you should look at the following criteria when choosing a Buy Now, Pay Later solution that fits your business: 

  • Repayment terms

Buy Now, Pay Later solution providers to offer multiple installment plays and term lengths- could be from a couple of weeks to several years. 

When analyzing your eCommerce business and understanding which repayment option works the best for you, you should determine your average order value or AOV. 

If you have a high AOV, these solution provides offer repayment over a longer period of time that can range from several months to years, making them the best choice for your business. But, if your AOV is lower, then it would be good to look at BNPL plans with fewer installments done over a short period of time. 

  • Credit limits

Most Buy Now, Pay Later solution providers have minimum and maximum credit limits and before selecting a provider, it is crucial to evaluate your eCommerce business credit limits and your average order value to understand what works best for your business.

  • Geographic locations served

Your Buy Now, Pay Later solution provider of choice should be considered based on the location you operate out. This can help you determine if you should be using multiple providers for a different market and this depends on your budget and access. 

Advantages of Ecommerce BNPL

Generally, eCommerce retails will choose to add Buy Now, Pay Later solutions to their online store for three main reasons: 

  1. Selling to a group of customers who use BNPL as a default payment method. 
  2. Offering the ability to purchase for customers when they can not afford to pay the full amount at the time of purchase. 
  3. To provide customer experience at par with your competitors or even stay ahead of the curve. 

Some BNPL solution providers offer to help in marketing the brand they work with, for instance sending vouchers or discount codes to a potential customer. But the focus is generally on increasing the possibility of a purchase from their recurring visitors rather than trying to attract new visitors.

And as mentioned, BNPL has an impact on visitors and eCommerce retailers. Moveover, BNPL is on the track to have an even larger impact since for customers, it offers a faster sign in comparison to credit cards, with little to no interest fees- thus, making this payment method appealing. 

And this appeal, in turn, benefits the business as it attracts more customers, enticees them to make bigger purchases (especially of big-ticket items), and reduces the number of carts abandoned. 

A Buy Now, Pay Later option attracts customers who are initially hesitant to purchase things that they saw were out of their budget. Thus, by offering a solution to make the price and payment more manageable, it ensures purchases from customers who were hesitant to complete the purchase.

Additionally, BNPL allows for customers to complete payments when their funds are lower like before payday or during the festive season. Therefore, BNPL contributes to reducing cart abandonement as it eases the pressure of making the complete payment right away; it makes payments more manageable. 

Some customers do opt for Buy Now, Pay Later method and it is a popular payment method, so staying up to date with this method can prove to be valuable to your eCommerce business. And integrating a BNPL payment method helps in boosting revenue, therefore, adding them to your online store can increase revenue in addition to the sales and marketing tactics.

Since BNPL solution providers offer defaults in every case, there is no risk involved for the retailer. 

Fashion, Beauty, Luxury Brands, Home- these are the verticals that BNPL solution provides are keen to work for. And if your eCommerce business is within any of these niches, then it is likely that your competitors already offer BNPL as a standard payment method and your customers may switch to purchasing from your competitor if you don’t match their service. 

Buy Now, Pay Later Providers in South East Asia

There is competition that is growing within the Buy Now, Pay Later marketplace- giving the eCommerce business owners and customers more options. 

Now, these are some of the leading Buy Now, Pay Later solution providers in South East Asia: 

One of the first BNPL solution providers in Vietnam, ReePay was established in November 2022. And is now taking the industry by storm. It targets a large number of Vietnamese consumers by encouraging and boosting digital transactions, improving the management of cash flow, and helping drive business and revenue for its merchants. 

An Indonesian digital consumer finance platform and BNPL powerhouse, Akulaku saw a 153% increase in revenue in 2021. With tremendous success under its belt, Akulaku is in the running to become South East Asia’s leading BNPL solution provider. Apart from Indonesia, this provider also operates in Vietnam, Malaysia, and the Philippines. 

As one of the most recognizable and reliable Singaporean-based BNPL solution providers, Hoolah made headlines when it raised an 8-figure amount during the Series A fundraising round- a remarkable feat. And between May 2020 and May 2021, they saw a growth of 600% increase in order volume. 

Their wings reach far and wide, working with eCommerce platforms across Singapore, Malaysia, and Hong Kong to raise funds to help with aggressive financial expansion and make them a force to be reckoned with. 

Headquartered in Mumbai, Pine Labs was established even before BNPL was a popular factor in the eCommerce business sector. Operating since 1998, Pine Labs provides BNPL solutions to over 40,000 eCommerce merchants and appeals to over 6 million customers throughout South East Asia, India, and the Middle East. 

This fintech firm has made US$3 billion in annualized Buy Now, Pay Later transactions and is only growing since then with plans to expand to more countries. 

How To Integrate Ecommerce BNPL Options:

If you want to offer Buy Now, Pay Later payment option at the checkout for your customers, BNPL solution providers will ask you to contact them and fill out certain forms focusing on the countries you operate in. 

You will also have to provide general contact details and information regarding your annual sales. It is simple and fast to get in touch with them and check out their BNPL options, making it easy to weigh out the pros and cons among the competition before committing to a single provider or multiple providers, depending on your eCommerce business requirements.


As the newer generation comes to take over the customer base and gain purchasing power while credit cards decline in popularity, they are naturally going to expect a flexible payment option.

And Buy Now, Pay Later presents as that alternative, making payments flexible and convenient that drive customers away from the unforgiving credit card companies and encourage them to opt for flexible options and spead their payments over time without bombarding them with interest fees. 

Digital financing options are on a steady rise and are only expected to grow in this technologically-inclined world. And for eComemrce businesses to stay ahead of the curve and provide that cutting edge that will meet the desires of the customers, they would need to implement Buy Now, Pay Later as an option.

Some of the biggest retailers in the space like ASOS, Wayfair, etc. provide BNPL payment methods at the checkout. 

BNPL as a phenomenon can not be ignored. Although it may not be the right choice for every eCommerce business, it is vital to keep up to date with the trending methods that are preferred by the customers to ensure their satisfaction or even delight, generate more sales and boost the overall revenue of the business.

It is highly likely that Buy Now, Pay Later will increase in popularity and relevance in the eCommerce business sector. Therefore implementing it into your business can prove to be beneficial. 

We hope that this guide has simplified Buy Now, Pay Later as an important factor in the eCommerce business industry and how it can be beneficial to you. 


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