BNPL

Also called Buy Now Pay Later, Affirm, Klarna, Afterpay, Pay in 4, consumer financing

Split-payment consumer financing at checkout. A conversion and ticket-size tool, not a payments cost play — the merchant pays more, not less.

What it is

Buy now, pay later lets a customer split a purchase into installments while the merchant is paid up front, minus a fee typically higher than card processing. PayPal and Square both price their BNPL products meaningfully above their own standard card rates — see each vendor's published fee schedule for the current figures. The merchant is buying conversion and average order value, not saving money. Usage is broad and overlapping. As of mid-2026, Affirm is used by 45% of BNPL users, Klarna 44%, PayPal Pay Later 44% and Afterpay 42% — figures that sum well past 100% because 74% of users used two or more providers within three months, up from 68% a year earlier. 88% prefer a provider that lets them choose how many payments to split into, 66% would accept interest for longer terms, and that rises to 79% on purchases over $500. Structurally BNPL is converging with installment lending. Banks including Citi, Chase and Amex are retrofitting installment schedules onto existing card products, Sezzle is pivoting toward a national bank charter, and Apple partnered with Klarna on a lease program.

Why it matters to your business

If your average ticket is $18, BNPL costs you money and buys you very little. If your average ticket is $8,000, consumer financing may be the difference between a signed job and a maybe — and that's a completely different calculation. The rule is simple: BNPL is a sales tool priced like a sales tool. Judge it on incremental closed revenue, not on rate. And if you adopt it, measure conversion for 60 days before and after, because vendors will happily let you assume the lift.

Where it gets contested

The consumer-protection critique of BNPL is well established: it extends credit outside traditional underwriting and reporting, encourages purchases people can't afford, and stacks across providers invisibly — the 74% multi-provider figure is precisely the stacking problem, since no single provider sees the customer's full obligation. Late fees and the absence of consistent credit reporting have drawn regulatory attention repeatedly. The merchant-side critique is simpler and less discussed: BNPL is expensive, and merchants often adopt it on a conversion promise they never measure. At BNPL pricing, which runs well above standard card rates, the incremental conversion has to be substantial to pay for itself, and most merchants never run the before-and-after. The fair case for BNPL is real in specific contexts. On high-ticket local services — HVAC replacement, roofing, marine repower, dental, med spa packages — the 79%-would-accept-interest-over-$500 figure is directly on point, and financing genuinely converts jobs that otherwise don't happen. That's not a payments decision; it's a sales tool with a price.

How to check it yourself

Before adding BNPL, record your current close rate and average ticket for 30 days. After adding it, measure both again. If closed revenue didn't move by more than the fee difference, turn it off. For high-ticket services, price the financing fee into the job rather than absorbing it.

Receipts

Claims above that are checkable, with where to check them. Published so you do not have to take anyone's word for it.

Mid-2026 BNPL usage shares: Affirm 45%, Klarna 44%, PayPal Pay Later 44%, Afterpay 42%; 74% of users used two or more providers within three months (up from 68%); 88% prefer choosing how many payments to split into; 66% would accept interest for longer terms, rising to 79% on purchases over $500
pymnts.com ↗
PayPal publishes Pay Later well above its standard checkout rate of 2.99% + $0.49
paypal.com ↗
Square prices Afterpay at 6% + 30¢ against 2.6% + 15¢ in person
squareup.com ↗