How “Buy Now, Pay Later” Options Can Help Your WooCommerce Store Grow Sales

March 23, 2022

As someone in the e-commerce business, you should be familiar with the phrase “Buy Now, Pay Later” at this time. ‘Buy Now, Pay Later’, BNPL for short, is the broad name given to a new set of services offering installment loans to finance online purchases. The biggest BNPL companies include America’s Affirm, Sweden’s Klarna, and Australia’s Afterpay. These companies partner with online retailers to offer loans to buy their products and charge the retailers for the service. Retailers are often open to such partnerships because they help drive sales.

BNPL companies have opened integrations with e-commerce software vendors such as WooCommerce and Shopify worldwide. If you meet their qualifications, it’s relatively easy to link your online store to BNPL services. It’s usually a win-win, giving your customers a way to pay less upfront for your products when they have a tight budget and giving you, the seller, increased sales.

What is Buy Now, Pay Later?

Buy Now, Pay Later is a simple concept. Customers make an online purchase and split it into monthly installments. It’s similar to the idea of credit cards but without some of the hectic requirements tied to them. Online stores can offer their own buy now, pay later financing, or go through third parties like Affirm, Klarna, or PayPal credit.

Buy now, pay later has been increasing in popularity; according to payments processing giant FIS Worldpay, it’s the fastest-growing e-commerce payment method globally and could reach $166 billion in annual volume by 2023.

How does BNPL work?

Buy now, pay later works by entering customers into a contract that requires them to make payments on both the principal and interest of a loan. You can do that directly, which is complex or go through a third party, the easy and ideal path. Say, for example, you integrate with a third-party like Affirm. When a customer chooses the BNPL option, Affirm pays you the product’s total price and agrees with the buyer to recoup their payment. For their service, BNPL lenders like Affirm usually charge a fee of between 3-5% of sales.

BNPL providers usually run soft checks on customers so that they’ll lend to the people likely to pay it back. They take on the loan and fraud risks while you have time to focus on your primary business.

How does BNPL help increase sales?

1. Price Markups

As an online merchant, you’ll get charged a fee for every purchase handled by a BNPL service, and the way to make up for this fee is by adding a markup to the regular price of your products. BNPL users don’t mind spending more money on a product if they’ll cover the costs with a payment plan, so you can mark up the price of your products by a significant margin when selling to them. For example, you can increase the cost of an item in your online store from $100 to $110 for BNPL buyers.

The advice here is to use reasonable markups so that your BNPL buyers don’t feel they’re getting ripped off.

2. Convert more visitors into buyers

If visitors to your online store have the chance to finance their purchases on your via BNPL services, they’re more likely to make a purchase. Surveys show that BNPL users spend an average of $1,141 per week, compared to $150 per week spent by non-BNPL users.

Another study commissioned by PayPal found that 28% of consumers aged 18-39 are more likely to shop at an online store again if they offer a BNPL option.

3. Seamless, one-touch checkout 

Making payments via BNPL providers is often smooth and easy compared to using credit and debit cards. They pride themselves on a one-touch payment system, where you need not input card numbers and verify them via a token or one-time pin. Users already have BNPL accounts with their information stored, so making a purchase is easy. This factor helps drive sales at online stores.

4. Interest-free loans, Friendlier access to credit

Many BNPL services advertise interest-free loans as a way to entice consumers. This pitch may sound too good to be true, but the catch is that these BNPL providers make most of their money from fees charged to merchants rather than the interest charged to consumers. Also, most, if not all, BNPL providers advertise no late fees, no prepayment fees, no annual fees, and no hidden charges. It’s like a friendlier version of credit cards, which entice consumers to use them to make purchases.

Implementing BNPL in your store is bound to attract customers wary of conventional credit cards but open to friendlier services. These customers spend more on online shopping than the typical non-BNPL user.

What are your BNPL options?

If you want to enable BNPL on your WooCommerce store, you can pick from several options. WooCommerce plugins let you quickly integrate them so far you meet their requirements. The most popular options include;


Affirm is the biggest BNPL lender in America. It’s compatible with businesses of all sizes, letting customer split their payments across 3, 6, or 12 months. Over 30,000 online retailers use Affirm, so you’ll be in good company if you do so.


Afterpay is available for online stores in the US, Australia, and New Zealand. It lets shoppers split their payments into four equal installments due every two weeks. Afterpay is used by over 60,000 online retailers and has over 5 million shoppers signed up on its platform.


By volume, Klarna is the world’s biggest BNPL lender; it handled $53 billion in transactions in 2020. It lets shoppers split their purchases into 4 or 3 equal interest-free payments.

PayPal Credit

PayPal, the popular payments gateway, has its own BNPL service called PayPal Credit. It lets shoppers split their purchases into four equal installments over up to six months. PayPal also owns Paidy, a BNPL lender serving Japanese retailers.

There are many other BNPL lenders, but these are the most popular.

Many BNPL providers have minimum purchase requirements to enable financing, so make sure you find the one that suits your products’ price range. For example, PayPal Credit only allows financing for orders of at least $99, so you should seek other options if you’re selling products priced below that. Different BNPL providers also charge different transaction fees, so ensure to find the one you can afford.

Will your customers qualify for BNPL financing?

Customers have to meet specific financial requirements to qualify for BNPL financing. In most cases, they’ll be required to complete a credit check and have a score above 650. They also must not have recent adverse financial events such as foreclosure and bankruptcy.

BNPL successful examples

Let’s see some successful online stores that increased sales after implementing BNPL services. You, too, can replicate this success on your WooCommerce store.

1. Affirm + Peloton

Peloton is a company that makes connected fitness equipment, including treadmills and stationary bicycles. Its products are expensive to the tune of thousands of dollars. To help drive sales, Peloton recruited Affirm as its exclusive buy now, pay later provider, and got outstanding results

Affirm said it now finances close to 30% of Peloton’s monthly online sales, which run into tens of millions of dollars. According to the company, Peloton saw a 16% jump in revenue per visitor after enabling Affirm as a payment option. In fact, according to Affirm’s disclosure to the US Securities and Exchange Commission, Peloton made up 28% of its revenue in the fiscal year ended June 2020. It was a win-win for both parties.

You can enlist the services of a WooCommerce development agency to help you activate BNPL options if it proves difficult to you. AnnexCore is an ideal example of a reliable WooCommerce agency.

2.  Afterpay + Morphe Cosmetics

Morphe Cosmetics is a leading online cosmetics company with over $500 million in annual sales. By its own words, it saw a 52% jump in average order value after adding Afterpay as a payment option.

Final Words

WooCommerce has made it easy to enable buy now, pay later on your store. Simply decide the specific BNPL service fitting your needs and install the extension onto your dashboard. The setup doesn’t take long, and you can immediately promote it to customers.

In this era in the e-commerce world, we think you’re losing out on significant sales if you don’t enable buy now, pay later as a checkout option on your store.

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