Buy Now Pay Later for Shopify Stores, Explained

Customers love flexibility, especially when it comes to payments. If a shopper hesitates at checkout due to price, they may abandon their cart entirely. That’s where Buy Now, Pay Later (BNPL) comes in. By allowing customers to split their payments into manageable installments, BNPL solutions can increase conversions, reduce cart abandonment, and boost order values—all without merchants assuming the risk of financing.

This guide breaks down how BNPL for Shopify works, from the pros and cons for merchants to top BNPL providers for Shopify and how strong fulfillment ties it all together.

How Buy Now Pay Later for Shopify Works

Buy Now Pay Later for Shopify works like customer financing does on most other ecommerce platforms. BNPL allows customers to make purchases immediately while spreading payments over a set period. 

Here’s the process broken down:

• A customer selects BNPL at checkout.
• They undergo a quick credit check (usually soft, not affecting credit scores).
• If approved, they pay a portion upfront, with the remaining balance split into installments.
• Payments are automatically deducted from their linked card or bank account on predetermined dates.
• Many BNPL services offer interest-free options if payments are made on time, while others charge fees for late payments.

For example, a $200 order might be divided into four payments of $50, with the first payment due at checkout and the rest paid biweekly over six weeks.

How BNPL Works for Merchants

BNPL providers pay Shopify merchants the full order amount upfront (minus fees), assuming the responsibility of collecting payments from customers. This setup eliminates the financial risk for store owners while providing immediate cash flow.

However, merchants do pay for the convenience. BNPL providers typically charge a transaction fee, often higher than traditional payment gateways like credit cards. Despite this cost, many Shopify store owners find the benefits outweigh the fees, especially if it means increasing conversions and customer satisfaction.

Pros and Cons Buy Now Pay Later for Shopify Merchants

Pros of BNPL for Shopify Merchants

Buy Now Pay Later for Shopify can work well. Merchants usually launch their own program in hopes of reaping the following benefits. 

Reduced Cart Abandonment

Price-related hesitation is a major cause of abandoned carts. By offering BNPL, merchants can encourage customers to move forward with purchases they may have otherwise delayed or abandoned due to cost concerns.

Increased Average Order Value (AOV)

BNPL options encourage customers to spend more per order. Research from Stripe found that merchants who offer BNPL see AOVs increase by up to 14%, as installment payments make high-ticket purchases feel more accessible.

More Sales from Younger Shoppers

Gen Z and Millennials are major adopters of BNPL, with 40% of Gen Z shoppers having used a BNPL service in the past 90 days. Since younger consumers may not have credit cards or prefer to avoid interest, BNPL provides them with a preferred payment alternative.

Immediate Payouts for Merchants

Unlike traditional in-house financing, where businesses wait for customer payments over time, BNPL providers pay merchants upfront, ensuring consistent cash flow.

Competitive Edge

BNPL is no longer a luxury—it’s becoming an expectation. Offering this option can differentiate your Shopify store from competitors that don’t, leading to higher customer retention.

Cons of BNPL for Shopify Merchants

There are drawbacks to Buy Now Pay Later for Shopify, too. Every business should consider the factors below before making a decision. 

Higher Transaction Fees

BNPL fees typically range from 1.5% to 7% per transaction—higher than standard credit card processing fees. Merchants need to determine if the increased sales volume and AOV justify the added cost.

Potential Customer Service Burden

While BNPL providers handle loan management, customers might still direct questions about repayments and late fees to the merchant. Clear policies should be in place to direct inquiries to the appropriate party.

Refund and Chargeback Complexity

BNPL adds an extra step to refunds. Merchants issue refunds to the BNPL provider, who then reimburses the customer. This can extend the refund timeline, potentially leading to customer frustration.

Limited Eligibility for Some Customers

Not all shoppers will qualify for BNPL, especially those with low credit scores or inconsistent financial histories. This limitation may exclude a segment of potential buyers.

Popular BNPL Providers for Shopify

Shopify integrates with several leading BNPL providers, each offering unique features and terms.

Here are the most popular options:

1. Shop Pay Installments (by Affirm)

• Shopify’s native BNPL solution
• Integrates directly with Shopify’s checkout
• Available for orders between $50 and $17,500
• No impact on credit scores
• Best for Shopify merchants looking for a seamless experience

2. Affirm

• Available in the U.S. and Canada
• Offers payment plans from 3 to 36 months
• No hidden fees or late fees
• Best for high-ticket items

3. Klarna

• Operates in the U.S., Europe, and Australia
• Offers four biweekly payments or monthly financing
• Charges late fees if payments are missed
• Best for fashion, beauty, and lifestyle brands

4. Afterpay

• Popular in the U.S., Australia, and New Zealand
• Splits payments into four biweekly installments
• No interest, but charges late fees
• Best for fast-moving consumer goods and impulse purchases

5. Sezzle

• Focuses on responsible spending with credit-building options
• Splits purchases into four payments
• No interest, but charges fees for missed payments
• Best for smaller, everyday purchases

Pair Buy Now Pay Later for Shopify with Five-Star Fulfillment

BNPL can drive more sales, but it’s only part of the equation. Customers who opt for flexible payment options still expect fast, accurate delivery. If fulfillment falls short, even the most convenient payment methods won’t save customer satisfaction.

That’s where third-party logistics (3PL) comes in.

A trusted 3PL partner ensures that BNPL-driven sales translate into seamless customer experiences with:

• Fast and accurate order fulfillment to meet customer expectations
• Real-time inventory tracking to prevent overselling popular BNPL-eligible products
• Efficient returns processing to streamline BNPL refund workflows

Shipfusion specializes in providing growing Shopify businesses with industry-leading fulfillment solutions. With 99.9% order accuracy and 99.9% on-time turnarounds, we handle the logistics so you can focus on selling.

Contact our team today to discover how seamless fulfillment can enhance your BNPL strategy.