How Merchants Decide Which BNPL Services to Offer

Introduction – BNPL as a Business Decision

Buy Now, Pay Later (BNPL) has seen a major surge in popularity among U.S. consumers, driven by the rapid expansion of BNPL services. It is especially true for online and everyday purchases. But while shoppers focus on convenience and flexibility, there’s another side to the story.

Behind the scenes, merchants aren’t just offering BNPL as a payment option. But they’re making strategic business decisions about which providers to partner with. These choices are based on customer behavior, fees, conversion rates, and long-term brand goals.

In this blog, we’ll break down how merchants choose BNPL providers. This includes what factors influence those choices, and how it all impact the shopping experience for consumers like you.

The Business Value of Offering BNPL at Checkout

Increases Average Order Value (AOV)

When shoppers can split payments, they’re more likely to spend more. BNPL often boosts cart sizes. This is because it reduces the upfront financial burden.

Reduces Cart Abandonment

Adding BNPL at checkout can keep shoppers from backing out at the last second. It gives them flexibility. This also lowers the psychological barrier of making a purchase.

Expands Access to Younger, Budget-Conscious Shoppers

BNPL appeals to Gen Z and millennials who may not have credit cards. Or they might prefer to avoid them. It gives these customers a way to buy without going into revolving debt.

Competitive Pressure: “Everyone Else Has BNPL”

As more retailers offer BNPL, it becomes expected. Not offering it can make a brand seem outdated or less customer-friendly. It is especially in online retail.

Also Read: Should You Ever Use BNPL for Groceries?

Key Factors Merchants Consider When Choosing a BNPL Provider

Integration and Platform Compatibility

Merchants need BNPL solutions. These can seamlessly plug into their existing e-commerce platforms. It includes platforms like Shopify, Magento, or WooCommerce. This comes with minimal friction.

Fees and Commission Structure

Each BNPL provider charges different transaction fees. It typically ranges from 2% to 6%. Merchants weigh these costs against the expected boost in sales.

Brand Alignment and Customer Trust

Merchants choose providers that align with their brand image. 

For example, Klarna may appeal to trend-forward fashion brands. Similarly, Affirm suits higher-end or tech-focused retailers.

Payment Risk and Chargeback Protection

Some BNPL providers take on the risk of customer default, while others may shift part of that risk to the merchant. This can significantly affect profit margins.

Global Reach and Cross-Border Functionality

A BNPL provider’s ability to handle multiple currencies and regions is a major factor for international brands.

Marketing Support from the BNPL Platform

Many BNPL providers offer co-marketing opportunities. It includes app listings, email promotions, and paid ad support to drive traffic back to the merchant.

Also Read: What Happens If You Miss a BNPL Payment?

Popular BNPL Providers and What Makes Each Unique

Klarna

Klarna is a favorite among fashion and lifestyle brands. It is especially those targeting Gen Z and millennial shoppers. It also has a strong international footprint. This makes it ideal for global merchants.

Affirm

Affirm is often used for higher-ticket purchases. This includes like electronics, furniture, and travel. It offers longer-term financing options and is known for transparency. There are no hidden fees or late charges.

Afterpay

Afterpay excels in the beauty, wellness, and lifestyle space. Its a simple “Pay in 4” model. Its strong mobile presence makes it a go-to for impulse-friendly, younger audiences.

Sezzle & Zip

These platforms are popular with smaller or niche retailers. They offer flexible payment options. These are often easier to integrate for newer or independent merchants.

PayPal Pay Later

Built into the existing PayPal ecosystem, this option leverages consumer trust and familiarity. It’s a great fit for merchants already using PayPal for payments.

B2B vs. B2C Merchant Considerations

Consumer Experience (B2C Focus)

• Seamless UX: 

BNPL must be easy to use. It is mobile-optimized and fast-loading. It gets integrated directly into the checkout flow without friction.

• Brand consistency: 

The BNPL option should feel like part of the brand’s identity. This means selecting a provider whose design, tone, and communication style align with the retailer’s image.

• Impulse-friendly features: 

Since many B2C purchases are emotional or spontaneous. This offers a frictionless BNPL option can help close the sale.

Invoice Management and Longer Terms (B2B Focus)

• Extended payment terms

Many BNPL solutions for B2B offer net 30, 60, or even 90-day terms. It is crucial for businesses to manage cash flow.

• Credit vetting and approvals:

B2B BNPL providers typically perform business credit checks and underwriting. This is before approving terms. This adds an extra layer of trust, but also requires more time.

• Invoicing and accounting integration: 

B2B merchants need clear and automated invoicing. They must have reconciliation and reporting tools. These must integrate with systems like QuickBooks, Xero, or NetSuite.

• Higher transaction limits: 

B2B purchases are often thousands of dollars. This is so BNPL providers must offer higher spending caps and tailored repayment structures.

Regulatory Compliance and Data Security

Compliance with CFPB Guidelines

U.S.-based merchants must ensure their BNPL providers comply with regulations set. This is enforced by the Consumer Financial Protection Bureau (CFPB). The CFPB has been increasing oversight of BNPL services, particularly around:

• Clear disclosure of terms (fees, interest, repayment schedule)
• Fair dispute resolution practices
• Prevention of deceptive marketing or lending behavior

Merchants partnering with BNPL providers are indirectly impacted by these rules. This should vet partners for regulatory alignment to avoid legal or reputational risk.

Customer Data Ownership and Sharing

BNPL providers collect valuable customer data. This ranges from shopping behavior to repayment history. Merchants should carefully consider:

• Who owns the data
• How that data is used. It is especially for marketing or cross-selling
• Whether the provider is transparent with users about data collection and sharing practices

You must choose a provider that prioritizes privacy, transparency, and compliance. It helps build trust. This also protects both businesses and customers.

Measuring the ROI of a BNPL Partnership

Uplift in Sales and Conversions

A measurable increase in completed purchases and average order value (AOV) is one of the clearest indicators of BNPL success is. Merchants often run before-and-after comparisons to assess how BNPL impacts:

• Conversion rates at checkout
• Cart abandonment rates
• Overall sales volume

These metrics help quantify the immediate revenue lift from offering installment options.

Repeat Purchase Rates

BNPL can also influence customer loyalty. By analyzing whether BNPL users return more frequently than non-BNPL shoppers. Merchants can gauge long-term value. Higher repeat purchase rates suggest that installment flexibility improves customer retention.

Customer Satisfaction Metrics

Merchants should monitor qualitative indicators. To round out the ROI analysis, they compare:

• CSAT scores (Customer Satisfaction)
• Product or service reviews mentioning checkout experience
• Post-purchase feedback on ease of payment and affordability

A positive experience with BNPL can enhance brand perception. It also boosts customer lifetime value.

How Beem Can Support Merchants in the BNPL Space

AI Wallet for Real-Time Customer Insights

Beem’s AI Wallet tracks how consumers use BNPL across platforms. It gives merchants a clearer picture of purchase patterns, timing, and product interest. This helps tailor offers and improve customer targeting.

BudgetGPT for Usage Trends and Repayment Behavior

BudgetGPT analyzes how shoppers manage their repayment schedules, identifying trends like early payoffs, late payments, or overextension. These insights help merchants assess financial health and customer segments.

Financial Signals and Spending Habit Analysis

With permission-based data, merchants can tap into broader financial signals. It is like total BNPL exposure or spending categories. This refines credit offers, reduces risk, and creates more personalized experiences.

Final Thoughts – BNPL Isn’t One-Size-Fits-All for Merchants

Choosing a BNPL provider is a strategic decision. It is not just a trend. Merchants must weigh costs, platform integration, brand fit, and customer experience. As BNPL evolves, smart merchants will continue to adapt their approach. This help them match changing business needs and shopper expectations.

As the BNPL space continues to evolve, merchants will need to regularly reassess. They must explore how these partnerships serve their bottom line. It must align with the brand identity. It is shaped by regulation, innovation, and changing consumer behavior.

In this growing and competitive space, the smartest BNPL decisions are the ones grounded in data. It must consider customer insights and adopt a long-term perspective.

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