6 Best Buy Now, Pay Later Apps for Small Businesses in 2023
Meaghan has provided content and guidance for indie retailers as the editor for a number of retail publications and a speaker at trade shows. She is Fit Small Business’s authority on retail and ecommerce.
Brigitte is a retail specialist and staff writer with brick and mortar management experience. She is versed in retail sales analysis, merchandising, and buying with an emphasis in retail sales and marketing across platforms. She has a BA in writing from Washington University, St. Louis.
This article is part of a larger series on Payments.
Buy now, pay later (BNPL) apps allow customers to pay for items in installments while you, the merchant, are paid in full right away. In general, there are two types of BNPL financing options―pay-in-four (25% payments every two weeks) or longer-term six- to 36-month financing plans. Some of the benefits of offering BNPL financing include increased average order value (AOV), higher conversion rates, and appealing to modern consumers.
In this article, we chose the six best buy now, pay later apps that retailers can use to offer BNPL financing to their customers. All the apps have strong reputations, good reviews, and lots of features for both consumers and retailers.
- Klarna: Best overall
- Affirm: Best for high-ticket items
- PayPal Pay Later: Best for businesses that already use PayPal
- Afterpay: Best for catering to younger shoppers
- Zip (formerly Quadpay): Best for small transactions
- Splitit: Best for international sales
Best Buy Now, Pay Later Apps Compared
Processing Fee | Payout | Sales Channels | |
|---|---|---|---|
 | 3.29% to 5.99% plus 30 cents* | Set payment schedule in contract | Online and in person (via app QR code or Klarna card) |
 | 5.99% plus 30 cents* | 1 to 3 business days | Online and in person (via Square POS or Affirm credit card) |
 | 1.9% to 3.49% plus 50 cents | Per your PayPal schedule | Online |
 | 4% to 6% plus 30 cents* | 48 hours | Online and in person (via Afterpay credit card) |
 | 2% to 4% plus 15 cents* | Set payment schedule in contract | Online and in person (via app QR code) |
 | 1.5% plus $1.50 to 3.9% plus 30 cents | 3 business days | Online and in person (via customer’s existing credit card) |
*From third-party sources. Pricing is not displayed on provider sites.
Loan Limit | Financing Options | Annual Percentage Rate (APR) | Late fees | |
|---|---|---|---|---|
| Based on individual credit | Pay-in-4, pay in 30 days or 6- to 36- month financing | 0% to 28.99% (APR only applies to 6- to 36-month financing) | $7 to up to 25% of purchase value |
| $17,500 | Pay-in-4 or 6- to 48-month financing | 10% to 36% (APR only applies to 6- to 36-month financing) | No late fees; missed payments impact credit |
| $10,000 | Pay-in-4 or 6- to 36-month financing | 9.99 to 29.99% (APR only applies to 6- to 36-month financing) | $0 to $10 or 25% of purchase or $8 of loan value (depends on state) |
| $2,000 | Pay-in-4 | 0% | $8 to up to 25% of purchase value |
| $5,000 | Pay-in-4 | 0% (charges transaction fees instead) | Up to 25% of purchase value |
| Based on available credit | 3- to 24-month financing | 0% | Credit card charges interest; rates vary |
Buy Now, Pay Later Quiz: What Is the Best App for Your Business?
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Klarna: Best Overall Buy Now, Pay Later App
Klarna
What We Like
- Lots of financing plan options
- No set loan limits
- Low APR for long-term loans
- Internationally accepted
What's Missing
- $7 late fee after 10 days
- 12-month contract
- High processing fees
Klarna Pricing and Key Features
- Merchant fees: Set during contract signing; typically rates fall between 3.29% to 5.99% plus 30 cents
- Customer fees:
- Pay-in-four: 0% APR
- Pay-in-30: 0% APR
- Monthly loan: 0% to 2.99% APR
- Late fees: $7 to 25% of loan value
We chose Klarna as the best overall BNPL app because it offers so much for both merchants and consumers. It’s the only one on our list that offers shoppers three ways to pay, but it pays merchants in full according to a schedule they set. It provides on-site messaging so that customers know they can use Klarna and what their payments will look like. Like many others, it has its own marketplace where you may attract new customers and offers integrated marketing campaigns for added promotion.
Klarna splits its plans depending on your gross annual sales: those making less than $3 million in sales and those making more. It’s free to get started, but Klarna does not list transaction pricing on its website. Its terms state that there’s a 12-month obligation with automatic renewal, so get a quote and do some comparisons before committing.
It services merchants in 17 countries, making it good for international sales. It integrates with only 11 shopping carts but is popular with payment processors like Stripe.
Did you know?
Klarna has more than 150 million shoppers using its financing services to pay for their purchases, along with more than 450,000 retail partners. Not only that, but merchants that offer Klarna see an average 37% to 6.3x increase in purchase frequency. Learn more in our Klarna review for businesses.
What Klarna Is Like for Shoppers
Shoppers have a choice of payment plans when it comes to Klarna. The most popular is the pay-in-four plan, in which they make a 25% payment at the time of purchase and pay the rest in three biweekly payments.They also have the option to pay completely in 30 days, which is great for on-a-whim purchases or something that can’t wait for payday.
Finally, for larger purchases, Klarna offers financing for up to 36 months, with monthly installments—but the interest is steeper than most credit cards (up to 28.99%). Consumers can manage their purchases and payments via the free Klarna app, where they can also shop and earn points on their purchases.
In the news:
In February 2022, Klarna opened up its waitlist for the Klarna Card to United States consumers. This gives consumers a physical card for making purchases in Klarna’s pay-in-four program.
How to Add Klarna to Your Checkout
To sign up with Klarna, you’ll need to provide a business email and have a live retail website, which must include business contact information, products with pricing, and clear policies for shipping and returns. When ready, fill out the form on Klarna’s website, then a rep will contact you to get started.
Klarna integrates with 11 ecommerce solutions, including BigCommerce, Shopify, and WooCommerce, and payment gateways like Stripe and Adyen. It also offers an application programming interface (API) for custom integrations and allows you to display financing options on your product pages.
Affirm: Best for High-ticket Sales
Affirm
What We Like
- Claims 85% increase in AOV
- $17,500 purchase limit
- Integrates with 47 ecommerce platforms
What's Missing
- Only services North America*
- Website does not list price
- Potentially high interest rate for customers
Affirm Pricing and Key Features
- Merchant fees: Undisclosed; third-party sources list prices of 5.99% plus 30 cents
- Customer fees:
- Late fees: None; missed payment may impact credit
- Pay-in-four: 0% APR
- Monthly loan: 10% to 36% APR
*Affirm works in Canada under the name PayBright. To use PayBright, you need a Canadian store and to bill customers in CAD, but do not need to have a Canadian entity or bank account.
Affirm differs from other BNPL apps because it offers a purchase limit of $17,500, which is the highest on our list by $7,500 as well as up to 48-month financing. For these reasons, we like Affirm best for high-ticket sellers. It works with big-ticket merchants like Kay Jewelers and Peloton, but it can work with small retailers as well, with pay-in-four options and a $50 minimum spend.
Like Klarna, Affirm does not reveal its transaction rates on its website. However, third-party sites claim transactions are around 5.99% plus 30 cents per transaction, which is higher than many BNPL options. Rates likely depend on your processing volume and overall size. Additionally, Affirm integrates with 47 ecommerce platforms, which is more than most on our list. It also pays you the full purchase price in one to three days, which is about average for BNPL services.
With Affirm’s 12.7 million US shoppers, retailers that offer its financing services report an average 85% boost in their AOV as well as a 20% repeat customer rate.
What Affirm Is Like for Shoppers
When customers check out on your site, they have the option to select Affirm as their payment method. Then, they can choose pay-in-four with no interest or spread the payments out over six to 48 months.
The most popular payment plans are three, six, or 12 months. All monthly plans, however, come with APR that can go up to 36%—higher than Klarna’s—but it depends on the individual’s credit. Affirm shows the interest at the time of payment so that shoppers can make the best decision.
How to Add Affirm to Your Checkout
To start with Affirm, you first fill out a form that includes your ecommerce platform and annual revenue. Then, a representative will contact you about tailoring a best-fit solution.
Affirm works with US-based businesses or businesses with a US entity, a US-based bank account, and the majority of their customers having a US billing address.
PayPal Pay Later: Best for Businesses That Already Process Payments With PayPal
PayPal Pay Later
What We Like
- Comes automatically with every PayPal account
- Low processing rates
- PayPal purchase protection
What's Missing
- Not available for in-store purchases
- Late fees can be steep
PayPal Pricing and Key Features
- Merchant fees: 1.9% to 3.49% plus 50 cents
- Customer fees:
- Late fees: $0–$10 or 25% of purchase or $8 of loan value (depends on state)
- Pay-in-four: 0% APR
- Monthly loan: 9.99% to 29.99% APR
PayPal Pay Later is a great option for lots of businesses, especially those that already use the company to process their payments. Every business that uses PayPal to process its transactions has access to its BNPL services automatically. All you have to do is integrate the BNPL option into your website’s checkout. This means that you don’t have to sign up for or integrate with another service in order to offer BNPL.
While it is easiest for PayPal users to use, you can also add PayPal Pay if you use third-party payment processors or even other BNPL apps. PayPal integrates with most ecommerce platforms but is not compatible with in-store use. PayPal also assumes all the loan risk with the same PayPal protection plan, the same one used for all other PayPal purchases.
Learn more with our full PayPal Business review.
What PayPal Pay Later Is Like for Shoppers
At checkout, shoppers will be able to choose PayPal as their payment method. From there, they can either opt for PayPal Pay-in-Four or a monthly plan through PayPal Credit. PayPal Credit lets customers choose from plans ranging from six to 36 months that are subject to APR, and pay-in-four lets customers pay for 25% of their purchase up-front and the rest in biweekly installments. If shoppers opt for pay-in-four, they will pay 25% upfront and then will be prompted to make a PayPal account to manage the rest of their payments.
For a PayPal credit plan, consumers will go through a credit check and, if approved, will then get to choose between different length financing plans. As with pay-in-four, they will then be prompted to make a PayPal account to manage their payments.
How to Add PayPal Pay Later to Your Checkout
To access PayPal’s financing services and offer them to your customers, you will need a general PayPal business account. Simply go to the PayPal website and sign up. From there, you can integrate PayPal into your ecommerce site via your account, and then opt to include BNPL options for customers to select in your settings.
Afterpay: Best BNPL App for Stores Catering to Gen Z
Afterpay
What We Like
- Integrated into Square POS, ecommerce, and other services
- 0% APR
- 48-hour payout, guaranteed
What's Missing
- Pricing not listed on website
- Only 19 ecommerce integrations
- Only pay-in-four financing available; no monthly financing plans
Afterpay Pricing and Key Features
- Merchant fees: Undisclosed; third-party sources say 4% to 6% plus 30 cents
- Customer fees:
- Late fees: $8 to 25% of purchase
- Pay-in-four: 0% APR
Afterpay is a pay-in-four BNPL app with the highest customer rating of those on our list—4.8 out of 5 stars, according to more than 180 customer reviews. Customers enjoy interest-free installments while you get your money in full within 48 hours of the purchase, guaranteed. Finance sites recommend the pay-in-four financing service especially for Gen Zers still learning to manage money. It offers smart card limits to help shoppers develop good spending habits, so it’s a good choice if you cater to that crowd.
In the news:
In January 2022, Block—which is made up of Square, Cash App, Spiral, TIDAL, and TBD54566975—acquired Afterpay for its family of financial services. Square launched its first integration with Afterpay, offering the BNPL service to Square Online in the US and Australia.
More recently, Afterpay is now available through Square POS for in-person payments.
You can integrate Afterpay with any of 19 ecommerce platforms or use an API. Afterpay works in eight countries: the US, Australia, New Zealand, the United Kingdom, Canada, France, Spain, and Italy. Like the other apps here, it does not charge cross-border fees. It also does not list fees on its website but gives a custom quote. We found transaction fees ranging from 4% to 6% plus 30 cents per transaction, which is on the high end for those in this guide.
Since our last update:
Afterpay has added seven new ecommerce integrations, formerly only integrating with 12.
According to Afterpay’s finding, 57% of consumers are more likely to choose your site if you offer Afterpay financing, retailer AOV sees an average of 18% increase when they offer Afterpay, and 85% of Afterpay users discovered a new merchant in the last six months via the Afterpay app. While impressive, Afterpay’s success stats are somewhat lower than those of the other providers. Even so, these are not bad, and the acquisition by Block certainly helps merchants using Square POS, ecommerce, and payment solutions.
What Afterpay Is Like for Shoppers
Afterpay is easy to use. Shoppers download the app and tie it to their digital wallet (Apple Pay, Google Pay, and Samsung Pay.) They can use the app for in-person sales or choose Afterpay when paying online. They put 25% down and have six weeks to pay, interest-free. If they are late with a payment, they may have a late fee of 25% of purchase or $8, whichever is less. The app encourages responsible spending by only increasing limits as the shopper successfully pays off purchases.
How to Add Afterpay to Your Checkout
Like the other top BNPL apps on our list (except PayPal), you’ll need to fill out a form and be contacted by a customer rep. Afterpay’s form is a little more involved, wanting your employer identification number (EIN), contact information, annual sales, and other data. Once approved as a legitimate business, Afterpay will set your processing rate terms and get you set up with an account where you can begin the integration process.
For Square users, Afterpay is already included in your account and you can integrate the service into your POS and website with the click of a few buttons.
Zip: Best for Small Transactions
Zip
What We Like
- Serves 51,000 merchants around the world
- Low processing rates
- Available anywhere Visa is accepted
What's Missing
- Does not list prices on its website
- Only offers pay-in-four financing options, no monthly
- $5,000 spend limit
- $1 customer transaction fee per payment
Zip Pricing and Key Features
- Merchant fees: Undisclosed; third-party sources say 2% to 4% plus 15 cents to 30 cents
- Customer fees:
- Late fees: $5 to $10, depending on state
- Pay-in-four transaction fees: $4 per purchase; $1 per installment
Since our last update:
Last year, Zip and Sezzle were planning a merge but Zip has since terminated the deal.
Zip (formerly Quadpay)is another BNPL service that caps its loans at $5,000, making it ideal for businesses that conduct smaller sales. Zip is also the only pay-in-four app in this guide that charges customers a transaction fee, instead of any APR.
Zip is convenient for merchants because it is accepted anywhere Visa is, both in-store and online all over the world. For in-person sales, customers can use their Zip app to generate a quick response code (QR) code on their purchase, and then you simply scan the QR code to process the payment. You don’t need to integrate with your POS system at all, making it the best for in-person sales.
Zip does not list its processing rates online, but research shows that they range from 2% to 4% plus 15 cents per transaction, with new customers seeing a 2% to 4% plus 30 cents charge. Customers also incur transaction fees: $4 per purchase and $1 per payment. This is unusual for BNPL apps, but does not take away from its popularity with shoppers.
Zip also claims some of the highest success rates of those on our list: 80% increase in repeat customers, 60% increase in order sizes, and 20% increase in cart conversion.
What Zip Is Like for Shoppers
To use Zip, shoppers download the app, create an account, and then link it to a payment card, such as Visa, American Express, and Discover. They can also link the app to their Apple Wallet and Google Pay to use it in person or when shopping online.
Then, when they want to use Zip for a transaction, they check the Zip option at checkout and enter into a pay-in-four plan. Alternatively, for in-store purchases, they can generate a QR code that can be scanned by the POS system, and opt for a pay-in-four payment method for in-store purchases. As with most of the other providers here, they can also use the app to shop in the Zip Marketplace. Zip autofills payment information for added convenience.
How to Add Zip to Your Checkout
As with our other providers, you will start by applying to Zip, which is typical, but you may have to disable any ad blockers before you do it. Once you have an account, you can easily add Zip to one of their nine integrated ecommerce sites or use an API to set up Zip payments.
Splitit: Best for International Sales
Splitit
What We Like
- Transparent pricing
- Charges to credit cards in installments; customers build credit
- Plus Plan includes gateway charges
- In-person: can be used anywhere Mastercard, Visa, and Discover are accepted; online: 53 nations
What's Missing
- Standard plan pays you in installments
- Pays out in three business days
- Integrates with only six ecommerce platforms
Splitit Pricing and Key Features
- Merchant fees:
- Standard: From 1.5% plus $1.50
- Funded: From 2.5%
- Splitit Plus: From 3.9% plus 30 cents
- Customer fees:
- Late fees: Credit card charges interest; rates vary
- Interest: As charged by your credit card
Splitit is the best BNPL app for international businesses because it is available in 53 countries. Klarna, PayPal, and Afterpay also work with international merchants, but in far fewer locations. Plus, like Zip, Splitit is good for in-person payments anywhere Mastercard, Visa, and Discover are accepted.
Like others on our list, Splitit takes responsibility for chargebacks and fraud. It’s also the only app here that has pricing plans on its website:
- Standard (from 1.5% plus $1.50): Pays you in installments in-line with the customer’s payment plan
- Splitit Plus (from 3.9% plus 30 cents): Pays in installments like the standard plan, but includes Splitit payment processing
- Funded (from 2.5%): Gets you the full amount up front; must be a US, Canadian, UK, German, or Australian business processing at least $500,000 annually
It is unusual to have options that don’t fund the merchant immediately. Splitit is also unique from a shopper perspective, which we outline below.
What Splitit Is Like for Shoppers
Splitit takes a unique approach to buy now, pay later. When a shopper selects Splitit at checkout, they will choose how many installments they want to make. Then, rather than paying through the BNPL provider, Splitit guarantees a shopper’s purchase by placing a preauthorization hold on their credit card while the total amount is outstanding. Splitit will reauthorize the hold and reduce the amount each month and the bill is paid off.
In other words, the entire transaction will appear on shoppers’ credit card statements, but they will only have to pay a set portion of the total each month, allowing them to enter a monthly payment plan without the steep APR that you see with our other providers.
Not only that, but customers will get all the benefits of paying with their existing credit card, including rewards, transaction insurance and protection against fraud.
Splitit does not charge shoppers or have late fees.
How to Add Splitit to Your Checkout
If you process under $2 million annually, you can create your Splitit account by filling out a form, and then add Splitit to your online store via an integration or API or simply start accepting in person. If you process more than $2 million a year, a rep will contact you about more customizations.
How We Evaluated Buy Now, Pay Later Apps
When considering the best BNPL apps, we took a two-pronged approach. First, we looked for those that worked well for customers because, if shoppers don’t use them, they’re no good for you. Here, we looked for ease of use, credit pulls, flexibility of payments, and whatever made it stand out from the crowd.
The second piece we looked at was the merchant side. Here, we looked at transaction fees and what benefits they claimed in terms of increased transaction amounts, repeat customers, and completed sales. We also took into account what country or state a merchant had to be in and where it accepted payments, what ecommerce platforms and other small business tools the company integrates with, and payout/funding times.
Bottom Line
Buy now, pay later apps are great for merchants, especially those selling online. They can cut down abandoned shopping carts, increase AOV, and encourage repeat shopping. You have to pay a transaction fee for most, but all can pay you in full, and most assume responsibility for chargebacks and fraud.
We chose Klarna as the best overall BNPL app. It works internationally, offers multiple payback options for consumers, and integrates with a wide variety of online ecommerce and payment processing systems. Head over to its website and fill out the form to get started.
You May Also Like…
- Learn more about accepting payments at your business with merchant accounts
- See the latest buy now, pay later statistics
- Read more about how to offer customer financing to your shoppers
