What You Need To Know About BNPL For Merchants

Thinking of adding a Buy Now, Pay Later feature to your checkout options? Here's everything you need to know about implementing BNPL.

WRITTEN & RESEARCHED BY
Erica Seppala
Editor & Senior Staff Writer

Last updated onUpdated December 1, 2025

REVIEWED BY

Expert Contributor

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Key Takeaways

BNPL services allow merchants to offer customers a way to finance purchases in installments.
BNPL can lead to increased sales and higher average order values, especially among younger shoppers.
Merchants pay fees to BNPL providers, but they receive the full payment upfront, mitigating financial risk if customers fail to make payments.

Buy Now Pay Later (BNPL) isn’t just a payment method. It can help customers spend more and increase your revenue. As more businesses adopt BNPL, not offering it could mean losing sales.

Here’s what you need to know before implementing it in your business.

Table of Contents

What Is Buy Now, Pay Later For Small Business?
How Does Buy Now, Pay Later Work For Merchants?
Popular Buy Now, Pay Later Providers
How To Become A Buy Now, Pay Later Merchant
Buy Now Pay Later Risks For Merchants (And How To Avoid Them)

What Is Buy Now, Pay Later For Small Business?

Buy Now, Pay Later lets customers split a purchase into multiple installments. It makes higher-priced items feel more affordable, which can help boost sales.

Like credit cards, BNPL comes with some fraud and repayment risks, but it can be used safely for both online and in-person purchases.

How Does Buy Now, Pay Later Work For Merchants?

Accepting BNPL is similar to taking a credit card. Your business gets the full purchase amount upfront, while the customer pays it off in installments. Most merchants choose one or two BNPL providers and promote them in-store or online.

Some POS systems offer BNPL acceptance built in. For example, Square merchants can accept Afterpay in-store or through their online checkout.

Benefits of BNPL For Businesses

Here’s a breakdown of the benefits of offering BNPL:

Encourages higher spending
Drives online sales
Adds another payment option
Appeals to younger shoppers
Helps you stay competitive
Convenient for iPhone users

Drawbacks Of BNPL For Businesses

BNPL isn’t perfect. Merchants may see higher fees and slower checkouts, and not every business qualifies. Common drawbacks include:

Higher processing costs
Limited integrations
Slower checkout
Not all high-risk businesses accepted
Fraud & chargeback risks

How Do BNPL Companies Pay Merchants?

BNPL providers typically deposit the full purchase amount into your merchant account within 1 – 3 business days. You can track payouts and transaction details through the provider’s merchant portal.

How Much Do BNPL Companies Charge Merchants?

Company	Eligibility	Merchant fees	Late fees	Term length
Affirm	18+ US resident Have SSN Have US phone number that receives SMS	5.99% + $0.30	None	6 weeks
Klarna	18+ Don’t have a lot of debt Link your bank account	3.29% – 5.99% + $0.30	$7 for each late payment	6 weeks
AfterPay	18+ US resident Valid email, delivery address & phone number Link a CC, debit card, or bank account	4 – 6% + $0.30	Up to 25% of purchase amount	6 weeks
Sezzle	18+ Valid email & US or CA phone number that receives texts Link CC or debit card	6% + $0.30	$10 for each late payment	6 weeks
Zip	18+ US resident Valid mobile number & mailing address CC or debit card	5% + $0.30	$5, $7, or $10 for each late payment	6 weeks
PayPal Pay In 4	Must be of legal age in your state of residence Not available in certain states	3.49% plus a fixed fee	None	6 weeks

BNPL comes with fees and requirements for both merchants and consumers. Merchant fees typically range from 3.39% – 6% + $0.30 per transaction, while consumers only pay fees if they miss a payment.

Key points to know:

Missed payments may lead to credit reporting, frozen accounts, or collections.
BNPL providers may run soft or hard credit checks on applicants.
Merchant eligibility often depends on your business type and whether it falls under a restricted industry.
Standard BNPL plans use four payments over six weeks, billed every two weeks.
Many BNPL companies now offer longer-term loans (6 – 12 months) and virtual card options.

Popular Buy Now, Pay Later Providers

Here’s a quick overview of the top BNPL providers.

BNPL Provider	Description
Affirm	Offers short- and long-term installment loans and integrates with major eCommerce platforms, including Shopify. Merchants get fast payouts and transparent terms.
Klarna	Provides four-installment plans, longer financing options, and strong eCommerce integrations. Known for a polished checkout experience.
Afterpay	Owned by Square, making it easy for Square merchants to accept BNPL in-store and online. Offers simple four-installment loans. Also integrates with Stripe, Squarespace, and more.
Sezzle	Focuses on younger shoppers and provides flexible installment plans with easy integrations for online merchants.
PayPal Pay in 4	Lets merchants offer BNPL through their existing PayPal Business account with standard PayPal fees. Includes both short-term installments and longer-term PayPal Credit financing.
Zip	Provides four-installment loans and works with many POS and eCommerce systems, offering online and in-person BNPL acceptance.

How To Become A Buy Now, Pay Later Merchant

Becoming a BNPL merchant is simple: apply to a BNPL provider, get approved, and integrate the service into your online store or POS system.

Most BNPL companies offer quick onboarding, easy integrations, and marketing tools (like web badges and in-store signage) to help you promote BNPL as a payment option.

Buy Now Pay Later Risks For Merchants (And How To Avoid Them)

BNPL works a lot like credit cards when it comes to risk. Most fraud losses fall on the BNPL provider, but certain situations can cost merchants money — especially when fraud or chargebacks are involved.

Stolen Or Fake Identities

Fraudsters may apply for BNPL loans with stolen or fabricated credentials, or hijack a legitimate account. If the BNPL provider or credit card company reverses the transaction, the merchant may lose the funds.

BNPL Chargeback Fraud

Customers can dispute BNPL purchases, claiming they didn’t authorize the transaction. The BNPL provider refunds the customer, and the merchant loses the sale and may pay a chargeback fee. Here’s what else to know:

Some cases are deliberate fraud.
Others are “friendly fraud,” like when a customer doesn’t recognize the transaction.
Merchants only win 20% – 30% of chargeback disputes.

How To Protect Your Business From BNPL Fraud

BNPL fraud risks are similar to credit card risks but can be higher due to easier borrower approval. To reduce exposure:

Choose BNPL providers with strong fraud controls. Larger, well-known BNPL companies generally do better identity and risk checks.
Keep your website and POS secure. Make sure your eCommerce platform, POS software, and payment tools have solid security features like tokenization, fraud screening, and updated PCI compliance.

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Erica Seppala

Editor & Senior Staff Writer at Merchant Maverick

Erica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.

View Erica Seppala's professional experience on LinkedIn.