Buy Now Pay Later products has advantages that can significantly influence the business performance for the better. Despite the challenges in BNPL, it outscores credit card pay options with better sales, order value, and customer reach.

Those who use a credit card pay the dues on a date much later than the day of spending. When smartly used, this credit limit helps us manage our cash flow position better. The Buy Now Pay Later (BNPL) credit products are the newest additions in the financial sector that has taken the industry by storm. 

With Buy Now Pay Later, the recovery against the instalment payment schemes offered to the customers is taken care of by a third-party BNPL provider. A recent entrant in the financial sector, Buy Now Pay Later apps had already captured 3% of the e-commerce market share by the end of the last year. It is estimated that this may rise to over 9% by 2024

There are several key benefits behind the popularity and the promising future of Buy Now Pay Later apps. Let’s explore.

Benefits of Buy Now Pay Later 

BNPL stands to benefit merchants in more ways than one. And that is what we try to look at here,

  • Higher sales: For buyers, BNPL companies offer the opportunity to buy products, as per their BNPL credit limit. The instalment option encourages buyers to buy products that they would have otherwise skipped, thus increasing the conversion rate and reducing cart abandonment.
  • Wider audience: Online sales automatically open the doors to customers, with customer credit history not necessarily a stumbling block to the transaction. Merchants having tie-ups with BNPL apps like PayU can cater to prospective buyers from all across the world. 
  • Higher high-value sales: BNPL poses a challenge to credit cards as a viable option for buying expensive products. it doesn’t impose high-interest rates. An interest-free period is followed by a competitive rate of interest. Buyers can now purchase high-value products from merchants through BNPL without worrying about the price.
  • Higher average order value: The affordable repayment process means they can spread out their expense over a period. With no immediate need for payment, customers shop more, and as a result, their order value increases. 
  • Improved customer experience: Pay later accounts offers customers the convenience of a digital process and seamless API integration. Customers selecting to pay through PayU can then pay interest-free within a limited period or repay with a low-interest rate charged.

A Bain & Company study also concluded that merchants experienced higher conversion, increased order value, and a new customer breakthrough through BNPL than credit card payment options. 

Also read: What Are Payment Gateway Charges

What Buy Now Pay Later (BNPL) Apps Need to Overcome

There are a few challenges that merchants may face while using BNPL solutions. As a service provider, PayU seeks to overcome these challenges and merchant onboarding a smoother and more satisfying experience.

  • Accreditation challenges: Accreditation for BNPL integration includes registration and approval of the BNPL provider and the acquiring and nodal banks. Besides, supplemental documentation may be required to verify merchant identity, legitimacy of the business, and correctness of information provided.
  • Higher merchant fees: There is a fee involved in BNPL services, and providers offer different packages to merchants. Merchants can select the package that suits their budget. PayU supplements the cost burden with excellent offerings like large volume discounts, custom pricing for large businesses and a dedicated account manager, to name a few.
  • Integration challenges: Merchants may have to spend on tools and technology to integrate the BNPL system. It is required to integrate the payment modes in the checkout process. 
  • Multiple options: There are many BNPL service providers, each with several packages of BNPL services. Selecting one can be confusing for the merchant. 


One may note that for the challenges it poses, Buy Now Pay Later may end up providing cost benefits to the merchant. With Buy Now Pay Later India is expected to see the latest payment optimization and payment security features in trade transactions, enabling merchants to handle global payments seamlessly.

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Frequently Asked Questions

How do the BNPL company and the merchant integrate?

The BNPL embedded financing solution is integrated into the merchant platform, be it a website or app. As a payment mechanism in the merchant platform, the BNPL provider offers the credit and adds a customer.

How are BNPL transactions settled?

The customer can select the preferred BNPL payment option while checking out. For instance, PayU pays the merchant the full purchase value of the order after deducting any applicable merchant fees and then collects the amount from the customer as per the agreed terms.