Buy Now Pay later business model | Is It right for you e-commerce

If you are addicted to online shopping, you must have noticed the installment payment alternative, Afterpay.

Afterpay expanded its international presence by partnering with many trendy e-commerce sites and it’s continuing to grow globally in the coming years.

These partnerships include trendy eCommerce sites like Reformation, Anthropologie, and Revolve, H&M, Patagonia, Lululemon, and Walmart to name a few.

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16% of all retailers use BNPL service.

Afterpay slogan “Buy now, Enjoy now, Pay later” has attracted around 3 million active users to sign up at the check out stage.

At the start, believe it or not, their market audience is the rejects of credit card companies, and it’s growing into other types of audiences like a wildfire.


One of their copy… It is compelling and memorable

afterpay copy


Afterpay and similar platforms offer an easy process of getting approval for installment if the shopping site at use has the service. It breaks down the payment into four subsequent payments within a period of 6 weeks. It charges a late fee if the loanee delayed after the due date.

Is It Right for your online business… Here are the Pros and Cons


  • No credit score required. Approval is simple and easy for consumers
  • full integration with refund and return policies
  • Afterpay pays your business immediately, with no delays or complications.


  • The consumer is charged a $10 late fee if they missed a payment. This will leave customers with a bad aftersales experience. As a result, they will associate the dissatisfaction with your business.
  • There is a transaction fee charged by Afterpay between 4-6% depending on the order value. This is even higher than credit card transaction fees.

Afterpay is the most popular platform for BNPL for many customers and can help your customers pay for purchases later.

Other platforms providing the same financial service

  • Affirm
  • Klarna


Buy now, Pay later Business Model





Interest rightwrongwrong
Late Feeswrongrightright


Transactional fees per purchase (BNPL Vs. Credit Cards)

BNPL vs. Credit card transaction fee



BNPL firms charge e-commerce companies more than credit cards in the transactional fees. However, they balance their higher fees by allowing easy approvals for customers at the check out stage to use installment-based payment thereby having a distinguished advantage over credit card companies like Visa and Mastercard.


Credit Card companies for years only allowed consumers to use their credit system, by having multitude of requirements like credit score and such.


There are reports that these credit card companies are coming into the game, therefore, disrupting the disruptors.

How BNPL firms are doing this?


  • Easy process for approval at check out stage. No requirements.
  • BNPL approached increased the size of the basket by 20-30%. Pretty convincing for eCommerce companies to adopt their service… no question asked.


What made the adoption so rapid to these firms?

  • 50% of 30 year olds are making less than their parents
  • Spending is on the rise.
  • 3/5 millennials are interested in installment for a large payment
  • Psychology plays a vital role.

Here is how Psychology is playing important role…

It is less scary to have four payments of $50 than $200 balance sitting on your credit card.

psychology effect


How drives 7% out of its Referral 1.96%


anthropologie referrals 1.96%



Now here is how out of 1.96%, 7.23% is referred by Afterpay. See below:


7.23% is refered by afterpay



Although, the 7.23% of the 1.96% of the total visitors (6.83M) amount to 9,678 customers referred to the site, don’t seem that big. however, consider that afterpay just got started and if it all works out as it already seems to… We are going to see a new shift in the eCommerce industry.


There is a bit of concern for me though regarding installments. I think it could encourage the habit of buying more even when you don’t need it. Yeah we make money but we don’t want that by making someone else’s life miserable later on, that’s if you truly believe in serving your customer.


Please share your thought, and how could we justify the encouragement of consumerism for the sake of money-making and making a fat pocket. It’s something I thought about for sometime. Have you thought about that before? I am curious.




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