The COVID-19 lockdown brought a dynamic shift in how consumers interact with businesses. Along with this, it saw a huge increase in digital adoption and more people are online than ever before. With e-payments in full swing, it gave online retailers the option to integrate their e-commerce platform with BNPL service companies.
While shopping online, most of you would have come across websites that allow Buy Now Pay Later (BNPL) service while shopping on their website. However, with a sense of scepticism about online banking, we never quite reached out to find out what it all meant.
As online stores are gradually becoming more aware of their customer’s needs and requirements, they are simultaneously coming up with customer-friendly payment solutions. All these solutions are continuously being integrated with e-commerce platforms.
In addition, BNPL service companies and traditional banks have entered into the system allowing similar payment arrangements. So, what is a BNPL service provider? How does it work? Let’s find out
What Is a BNPL Service Provider?
How Do BNPL Service Providers Contribute to E-commerce?
Top 10 Best BNPL Service Providers
What Is a BNPL Service Provider?
Once a completely unknown concept, BNPL companies are slowly starting to make their way into the world of e-commerce. A “Buy Now Pay Later” company allows customers to pay for goods and services in a series of instalments rather than paying the full amount upfront.
A few popular examples of such BNPL companies include apps such as AfterPay, Affirm, Laybuy, Klarna, and others. A BNPL service provider, popularly referred to as BNPL apps are easy to use and generally has low-interest rates and high credit limits allowing customers to make common purchases with ease.
BNPL service providers develop and create an app-based form of payment that can be used for both in-store and online payments. The BNPL model is relatively similar to a credit card as BNPL apps allow users to pay for items in a series of instalments over time.
In simple words, a BNPL is a micro-credit option that allows you to shop online and pay off the amount in either days or weeks with little or no interest whatsoever. The rise in BNPL services has filled in a huge gap brought about by the pandemic. Apart from the e-commerce platform, BNPL service options can now be found on food delivery, travel booking, grocery shopping and other relevant platforms as well.
How Do BNPL Service Providers Contribute to E-commerce?
Not just an e-commerce platform, BNPL Service App can also be used for in-store payments. Every time a consumer buys a product using the BNPL Seva App, the seller (merchant) gets the full payment instantly. Meanwhile, the customer can pay the fee in a series of instalments over time.
Moreover, these BNPL applications charge no interest for customers that stick to their payment deadline. The process of using a BNPL app is simple. Approvals are straightforward and BNPL Company can run a quick and easy credit check that will not affect your credit score.
BNPL service applications not only benefit the customer but also have several advantages for retailers and online store owners. There are several reasons why an online store owner chooses to integrate a BNPL service into its e-commerce platform. Such benefits are
- Makes it easy for merchants to sell to a particular of customers who use a BNPL service regularly
- Offers customers the ability to buy an item even when they don’t have the full amount upfront.
- Stay on top of the market competition or try to get an edge over the market by matching the customer experience offered by other market players.
- Helps improve and increase consumer spending by enabling customers to make larger purchases without requiring a credit card.
- This opens up another market segment comprising a young audience that has a higher shopping frequency.
Recently, BNPL companies have started to market various brands they work with by mailing vouchers and other exciting offers directly to their customers either via email, newspapers and others. The primary intent behind this isn’t to attract new customers, but to increase the purchasing frequency of the existing ones.
Top 10 Best BNPL Service Providers
The market is highly dynamic in the 21st century. So, if you are a store owner or an e-commerce website, you must be aware of the market trends to better serve your customers and create a completely satisfactory user experience.
Along with this, you need to pay due attention to the payment method used by your customers to pay for their purchases. Being aware of this will only aid in customer satisfaction and help improve the purchase frequency of your existing customers. To achieve this, many e-commerce websites have integrated themselves with BNPL service companies, allowing their customers to have BNPL options as they check out. However, given the abundance of BNPL service companies at your disposal, choosing the right company for your business can be difficult.
To make things easier for you, we have put together the top 10 BNPL service providers that you can opt to go for in 2023.
Simpl
| Rating | 4/5 |
|---|---|
| Founded | 2016 |
Beneficial to both merchants and customers alike, Simpl was launched in India way back in 2015. Over a period of time, it has grown to become one of the largest players in the BNPL segment in India. Launched as a mobile-first platform, Simpl offers instant approvals that allow a user to pay with a single tap.
With Simpl, you have the option to pay later at your convenience. Alternatively, you also have the option to pay in a series of 3 instalments with zero additional charges. Simpl is known to have partnered with 4,500 sellers and merchants across India with a customer base of almost 7 billion.
Pros:
- Customisable checkouts option
- You can do mobile payments anywhere
Cons:
- No free trial provided
Monoova
| Rating | 4.2/5 |
|---|---|
| Founded | 2017 |
If you are looking to add to the efficiency of your payment workflows, then Moonova’s API integration is exactly what your business needs right now. Thanks to the app’s simple API integration, you get instant account reconciliation, real-time debts and payments, and can assign unique account numbers to the different accounts on your payroll.
Moonova uses multi-factor authentication that helps to protect you from online fraud, phishing, and other malicious websites by adding another solid layer of security to all your transactions. The company has recently partnered with Truelayer, a global leader in open banking to ensure smarter, faster, and streamlined data-enabled payments in the market.
The platform’s rock-solid algorithm allows you to conduct the heaviest of transactions with maximum ease. Additionally, the platform offers local support at all times followed by easy-to-use developer tools that you can use within your existing infrastructure
Pros:
- Streamlined data-enabled payments
- Muti-factor authentication
- Maximum stability
Cons:
- Needs regular updates and maintenance
PayPal Pay Later
| Rating | 4.4/5 |
|---|---|
| Founded | 2020 |
Whether you are a small business owner or a company with your own name, PayPal Pay Later is a great option for both. Not only is this great for business owners, but it is also highly convenient as a payment method for BNPL application buyers, allowing them to opt for PayPal Pay Later credit plans.
The PayPal Pay later credit plan allows users to choose from six to 36 months as their preferred payment plan. Business owners using PayPal for their transactions have direct and automated access to BNPL services. For this, all the business holders need to integrate the BNPL option of PayPal on their website.
Though the app is not compatible with in-store purchases, it integrates with most of the e-commerce platforms present in the market. Finally, PayPal offers a PayPal Purchase Protection Plan that assumes all credit risk and can be used for all PayPal purchases.
Pros:
- Low processing fees
- PayPal purchase plan
- Integrates with most eCommerce platforms
Cons:
- Not available for in-store purchases
- High late fees
Afterpay
| Rating | 4.1/5 |
|---|---|
| Founded | 2014 |
Afterpay is a pay-in-four BNPL app that lets users enjoy interest-free instalments with a guaranteed payment of 48 hours to the seller. This BNPL service primarily caters to the needs of Gen Z who are learning to manage money on the go. Smart cards have limits for customers who want to inculcate good spending habits. By 2022, the app has been integrated with around 19 e-commerce websites and can also be used as an API. Operating in 8 countries, the app does not charge any cross-border fees.
Although pricing is not available on the website, popular user reviews indicate that this BNPL service charges between 4% to 6% plus 30 cents per transaction. As a Gen Z shopper, all you need to do is add Afterpay to your digital wallet.
Unlike PayPal, Afterpay is available for both in-store and online purchases. When using Afterpay, you need to put down 25% of the amount in the first phase and then pay the balance in six weeks without any interest charges.
Pros:
- 48-hour guaranteed payout
- Works on the POS system
- Integrates with several eCommerce platforms
- 0% APR
Cons:
- Pricing not available
- No monthly financing plan present
ZestMoney
| Rating | 4.2/5 |
|---|---|
| Founded | 2015 |
ZestMoney has rapidly grown to become one of the fastest-growing fintech companies in India. Similar to most BNPL services, ZestMoney allows users to make online purchases and pay back the money in a series of instalments with minimal interest charges.
The platform’s algorithm integrates mobile technology, digital banking and AI under the same bracket to provide capital access to those who cannot afford loans through traditional mediums. However, unlike the rest, ZestMoney is designed explicitly for heavy purchases such as furniture, flight tickets, or other so on that aren’t covered by other BNPL lending platforms. The app offers interest-free instalment options to select merchants for a period of six to ten months.
Pros:
- No-cost EMI on selected platforms
- Instant loan approval and disbursal
- Flexible EMI options
Cons:
- Caters to heavy purchases only
- The issue with user privacy
Klarna
| Rating | 3.5/5 |
|---|---|
| Founded | 2005 |
Klarna was started by the Stockholm School of Economics and is one of the most popular BNPL companies of the 21st century. With Klarna, you shop and you have the flexibility to split your purchases into 4 simple interest-free payments.
You can get more time to make payments whenever you need them by simply extending your due date in the app. Once all the payments are done, all you have to do is report it on the app and all the payments will automatically stop. Shop wherever you are and pay directly from a desktop, smartphone or in-store.
Pros:
- Available online and in-store
- Multiple payment structures
- Available in multiple countries
Cons:
- Each purchase requires Klarna’s approval
- High late fee
Zip
| Rating | 4.8/5 |
|---|---|
| Founded | 2013 |
Earlier known as Quadpay, Zip provides savvy buyers with greater freedom and essential flexibility to make payments anytime, anywhere using the BNPL platform. Established in Australia in 2013, this BNPL service extends to more than 12 international markets.
Whether you are a shopper or a merchant, Zip offers transparent and interest-free credit options to all that don’t hassle or disrupt the traditional credit card model. Similar to Klarna, Zip allows you to pay in 4 interest-free instalments. With Zip, you can pay for products directly using your phone or in-store.
Pros:
- Available online and in-store
- Active notifications
- Virtual credit card options
Cons:
- Single payment structure
Sezzle
| Rating | 3.5/5 |
|---|---|
| Founded | 2016 |
Sezzle has now over 3 million active users comprising over 50,000 merchants on its platform. Operating primarily in the US and Canada, Sezzle serves as an alternative payment platform with 4 instalment free payment options spanning over 6 weeks.
As a certified nonprofit B corporation, you have the flexibility to reschedule your payments for up to two weeks at a time. You can shop and pay for your favourite brands both online and in-store using the Sezzle app.
Pros:
- Options to Reschedule Payments
- Virtual Credit Card Options are available both online and in-store
Cons:
- Missed payments result in Account deactivation
- Single Payment structure
Affirm
| Rating | 4.3/5 |
|---|---|
| Founded | 2017 |
Since 2017, Affirm has financed over 17 million purchases and is currently available to more than 30,000 retailers in the US. The company primarily operates in financial lending of instalment loans to their customers for use at every PoS purchase.
Depending on your payment plan and eligibility, you can avail of up to 0-30% interest. This US-based BNPL service provider provides you with a flexible, transparent, and more convenient way of helping customers pay overtime as per the payment selection made by the customer.
Pros:
- It has email Notifications
- It has Customer Portal for financial tracking
Cons:
- Very high-interest rates which vary from 10%-30%
- It requires a credit check
Upstart
| Rating | 3.3/5 |
|---|---|
| Founded | 2012 |
The greater the access to affordable credit schemes, the greater the risks and associated costs. However, Upstart is a leading AI lending platform that works with banks and credit unions to help consumers settle their loans with simple payment plans.
The process of applying for an UpStart loan is quick and easy. You start by checking eligibility without worrying about whether or not it will affect your credit score. Even if you are not eligible for the amount you requested, they offer some other options. You can then choose different amounts to get estimated APRs.
Pros:
- Available In-store and Offline
- Active Notification
Cons:
- Single Payment Structure
Conclusion
Since the onset of the COVID-19 pandemic, the world has become a bit reluctant to venture out to shop. This has put an emphasis on online shopping in a big way allowing more and more e-commerce platforms to grow and develop every day. Meanwhile, online retailers and e-commerce websites are also making more efforts to match the user experience as per the market competition. For this, most of the e-commerce platforms have implemented a convenient BNPL service.
Without further ado, BNPL services are already making an impact on customers and vendors alike. Looking at the pace at which it is developing, BNPL service companies are all set to become a big element of both in-store as well as online shopping in the years to come. Whether you own a store or an e-commerce website, you need to be updated about the modern payment methods customers use to make their purchases. Doing so will only aid in customer satisfaction and ultimately generate more sales.
FAQ
How much do BNPL providers charge merchants?
Most BNPL retailers do not publicly disclose their merchant fees, but they typically range between 2% and 8% of a customer’s purchase amount.
What are BNPL services?
Buy now Pay later or BNPL is a type of instalment loan. It divides your purchase into multiple equal payments, with the first due at checkout. The remaining payments are billed to your debit or credit card until your purchase is paid in full.
What is Amazon BNPL?
Amazon Monthly Payment is a buy now, pay later (BNPL) option. However, if it isn’t offered on your product or does not meet your payment needs, you could choose a third-party BNPL provider.
Is BNPL a product or service?
BNPL products are credit products, just like any other loan, and will take regular repayments from your bank accounts or credit card.
Is BNPL a payment method?
The buy Now Pay Later (BNPL) scheme is a method of payment which allows consumers to pay for their purchases in short instalment periods without any interest charges or fees.
