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BNPL Companies: 7 Buy Now, Pay Later Apps for Your Business

BNPL Companies

Buy now, pay later companies are popping up across the ecommerce world. Known as BNPL companies for short, these plans allow customers to divide payments into specified installments with companies such as Afterpay and Klarna, rather than pay the full amount when purchasing the item. BNPL apps are easy to use, and have low interest rates and fees as well as credit limits that allow customers to make most common purchases.

As a business owner, BNPL makes things easier for your customers and can increase your bottom line. With BNPL, you can offer your customers a simple way to make payments on purchases, while ensuring you receive the full amount immediately. Once you know the benefits popular BNPL companies offer, you can decide on the best one for your needs.

What are buy now, pay later (BNPL) companies?

BNPL companies create and support an app-based form of payment you can find both online and in stores. In many ways, the BNPL model is similar to a credit card: When a consumer buys products and services using the app, the merchant receives the payment immediately, and the consumer is able to pay the charge over a set period of time.

For consumers, there are a number of advantages to using BNPL for payment. The repayment structure is simple and straightforward, and BNPL companies usually don’t charge interest or fees for users who pay on time. Additionally, most BNPL apps are easy to opt into and the approval process is straightforward. A BNPL company might conduct a soft credit check on new users, which won’t affect a customer’s credit score.

BNPL apps can be a winning situation for all involved. Consumers can finance purchases they might not otherwise have been able to afford, it reduces abandoned online shopping carts on merchant sites, and BNPL companies earn fees from the merchant for processing the transaction.

7 popular BNPL companies

Working with BNPL companies that have established reputations will remove some of the uncertainty for you and your customers. Here are the seven most popular.

Affirm

Founded in 2012, Affirm is available in the U.S. at more than 29,000 retailers and has financed over 17 million purchases.

The facts

  • Interest: 0%–30%, depending on the payment plan and user eligibility 
  • Loan term: Six weeks, six months, or one year
  • Fees: None
  • Credit line: Up to $17,500

Pros

  • Available both online and in-store
  • Multiple repayment structures offer a wider range of options
  • Merchants set their rates and repayment timelines
  • Performs a soft user credit check

Cons

  • Missed payments may affect users’ credit scores
  • Most transactions require a credit check
  • Some transactions charge interest

Afterpay

Afterpay launched in Australia in 2014 before expanding to the U.S., New Zealand, and the U.K. Currently, some 122,000 brands—including 23,000 U.S. retailers—use Afterpay to reach more than 19 million customers.

The facts

  • Interest: None
  • Loan term: Six weeks
  • Fees: Late or missed-payment fees can reach up to 25% of the purchase price
  • Credit line: Starts at $500

Pros

  • Encourages responsible spending for students and those who haven’t built up credit, bringing new consumers into the market
  • App includes a virtual credit card for in-store purchases at any store—even if that store isn’t an Afterpay partner
  • A reminder feature helps users stay on track with payments
  • Late payments won’t affect users’ credit scores

Cons

  • Only one payment structure
  • Each purchase must be approved by Afterpay
  • Not all purchases will be approved
  • Late fees can be as high as 25% of the purchase amount 

Sezzle

Founded in 2016, Sezzle has 3.4 million active customers and 46,000 active merchants on the platform. As a certified B Corporation (nonprofit), it offers customers the ability to reschedule payments for up to two weeks of additional time.

The facts

  • Interest: None
  • Loan term: Six weeks
  • Fees: Missed payments result in account deactivation; $10 reactivation fee
  • Credit line: Varies depending on the user

Pros

  • Proven commitment to social and environmental standards 
  • Allows users to reschedule payments three times for up to two additional weeks
  • Users can build credit with the Sezzle Up option, which reports on-time payments to credit bureaus
  • Virtual credit card allows for in-store payments at select retailers
  • Excellent customer service
  • Performs a soft credit check on users

Cons

  • Only one payment structure
  • Fees apply for additional reschedules

PayPal Pay In 4

PayPal is one of the most popular online payment processing platforms. As of August 2020, it also offers BNPL with millions of online merchants. 

The facts

  • Interest: None
  • Loan term: Six weeks
  • Fees: None
  • Credit line: $1,500 per transaction

Pros

  • Familiar brand name
  • Easy to add for merchants and customers with existing PayPal accounts
  • Integrated with the existing PayPal payment setup
  • Covered by PayPal’s Purchase Protection, offering users an additional level of security on purchases
  • Performs a soft user credit check

Cons

  • Not available for in-store use
  • Limited to U.S. buyers and sellers, excluding those in New Mexico, North Dakota, Missouri, Wisconsin, Nevada, and all U.S. territories
  • Purchases must be approved by PayPal
  • Missed payments may affect users’ credit scores

Klarna

Klarna is one of the most well-known BNPL companies. It was founded in 2005 by students from the Stockholm School of Economics and is now available in more countries than its competitors.

The facts

  • Interest: None for the Pay Later in 30 Days and Pay in 4 plans; 0% to 19.99% for monthly financing
  • Loan term: 30 days, six weeks, and up to 36 months (monthly financing)
  • Fees: $7 late fees for missed payments for Pay in 4 plan, and up to $27 for returned payments on the Pay Later in 30 Days plan
  • Credit line: $1,000 for Pay Later in 30 Days and Pay in 4 plans; $10,000 for monthly financing options

Pros

  • Available both online and in-store
  • Multiple repayment structures offer a wider range of options, allowing customers to finance medium and large purchases
  • Available in several countries in Asia, Australia, Europe, and North America
  • Performs a soft credit check on users for Pay Later in 30 Days and Pay in 4 plans
  • Mobile app users can join Vibe, a free rewards program with exclusive sales
  • Users can generate a single-use virtual gift card, which can be used in any online store—even in stores that aren't Klarna partners
  • Promotes partners through app, social media, and newsletters

Cons

  • Each purchase must be approved by Klarna
  • Monthly financing users will undergo a hard credit inquiry
  • Some fees for late payments

Splitit

Splitit was founded in 2012 and is a unique competitor in the BNPL space. Unlike other BNPL companies, Splitit works through users’ existing credit cards, charging the full purchase amount to the card over time in small increments.

The facts

  • Interest: None
  • Loan term: Varies
  • Fees: None
  • Credit line: Uses customers’ existing credit card limits

Pros

  • Available both online and in-store
  • No applications, registration, or credit checks required
  • Uses customers’ existing credit cards, allowing them to earn rewards on purchases and build credit without accruing interest
  • Users can make larger purchases without worrying about interest
  • Partnerships with Visa, Mastercard, and Stripe
  • Merchants are able to set their own qualifying purchase amounts and select between two different business plans

Cons

  • Users must have a credit card with sufficient credit to cover the cost of purchases
  • Not available with Amex cards

Zip

Formerly known as Quadpay, Zip is an Australian BNPL company launched in 2013 with a simple concept: Make a purchase today and split the payment into four equal, interest-free installments. Unlike other BNPL companies, customers can use Zip for both online and in-person shopping.

The facts

  • Interest: None
  • Loan term: Six weeks
  • Fees: $1 convenience fee for each payment—a total of $4 per order; late fees of up to $7
  • Credit line: Varies by user

Pros

  • Available both online and in-store
  • Virtual credit card allows for in-store purchases, even if the store does not partner with Zip
  • Notifications help users stay on track with payments
  • May perform a soft credit check on users

Cons

  • The $1 per payment convenience fee means that every purchase costs an extra $4
  • Only one payment structure
  • Each purchase must be approved by Zip

BNPL companies FAQ

Who are the biggest BNPL companies?

With millions of users, Klarna and Afterpay are the two biggest BNPL companies, according to a 2022 report from yStats.com. Both companies work with tens of thousands of retailers and are responsible for millions of transactions.

Does BNPL help your credit score?

BNPL does not help increase your credit score. With short-term repayment schedules, you typically won’t build up enough credit history for BNPL companies to report it to credit bureaus. Your credit won’t be negatively affected by late payments, but you won’t build credit either. Some companies, however, including Sezzle, do offer payment plan options that can help users build their credit scores.

How popular is BNPL?

With names like Klarna, Afterpay, and Affirm gaining wide recognition, and big, established finance companies like PayPal hopping on board, BNPL services are becoming popular in the financial services industry. Additionally, the 2022 Global Payments Report, published by Fidelity National Information Services, projects that the BNPL sector will grow from 2.9% of the global ecommerce transaction value to 5.3% by 2025.

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