BNPL (Buy Now, Pay Later)
A checkout financing option letting shoppers split a purchase into installments, usually through a third-party provider.
In practice
The provider takes on the credit risk and usually charges the merchant a fee per transaction in exchange - shoppers often spend more per order when BNPL is offered, since the upfront cost feels smaller even though the total price is the same.
A shopper buys a $400 item and splits it into four interest-free payments of $100 through a BNPL provider at checkout.
Why it matters
Offering BNPL has been shown to increase both conversion rate and average order value, since it lowers the perceived upfront cost of a purchase without changing the actual price.
Worth knowing
- The provider takes on credit risk and pays the merchant upfront for a per-transaction fee.
- Works especially well for higher-priced items where the full amount might give a shopper pause.
- Return and refund handling needs to account for the installment structure.
Related terms
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