Best buy now, pay later platforms for small businesses

More people are now using the buy now, pay later method as a direct result of the rise in cost of living. Here are the best platforms to use for your small business

Buy now, pay later (BNPL) schemes are growing in popularity as the cost of living increases. According to Forbes, 70 per cent of UK BNPL users are using the flexible payment method as a direct result of the crisis.

Even so, interest has boomed worldwide, with around 360 million people now using BNPL services.

According to Forbes, 18 to 24-year-olds are the biggest users, with 80 per cent using the service monthly, followed by those aged 25 to 34.

However, those aged 55 and over have doubled their use of BNPL worldwide over the past 12 months and 70 per cent of 55 to 64-year-olds in the UK use the service monthly, according to research.

The biggest attraction for using the service is the division of purchases into manageable payments with the most likely purchases being electronics and clothes. This is unsurprising given PNPL services are often marketed to a young audience via social media.

Advantages of using a buy now, pay later service

The biggest advantage of incorporating a BNPL service into your business website is that it goes further to offering a seamless buying experience for the customer.

Providers such as Klarna will also be quick to point out that having the option on your website can have a positive impact on sales, customer retention and average order value. One study found 69 per cent of UK retailers reported improvements to sales after implementing the service.

To the seller, there’s little, if any, inconvenience. You receive the money upfront as normal and you don’t need to think about the collection of instalments – that responsibility falls on the BNPL provider.

Providers also offer zero-fraud liability – meaning they cover the cost in the event of a fraudulent customer – and seller protection against credit risk.

What is the cost to businesses?

Generally, BNPL services make their money from charging businesses a set-up fee and ongoing transaction fees, which tend to be between 2 and 8 per cent. From customers, they can collect any late payment fees.

Best buy now, pay later platforms

  1. Klarna
  2. Paypal
  3. Clearpay
  4. Payl8er
  5. Laybuy
  6. DivideBuy
  7. Zilch

#1 – Klarna 

Klarna’s BNPL offering includes ‘buy now, pay in 3’ for customers and AI-powered marketing solutions such as ads and sponsored content, CRM campaigns and browser extension for businesses with annual sales of £3m and over.

Merchant transaction fees: Dependent on business size and contract

Interest fee to customer: None

Late payment fee to customer: Up to £5

#2 – PayPal

Like Klarna, PayPal’s buy now, pay later service ‘Pay in 3’ offers customers the chance to pay in three instalments at no extra cost or risk to the seller.

It also offers insights into how BNPL is performing on your website with frequent reports and has the bonus of being an internationally trusted payment platform.

Merchant transaction fees: From 1.2% + fixed fee for UK based cards

Interest fee to customer: None

Late payment fee to customer: None

#3 – Clearpay  

Clearpay offers customers the chance to pay in four interest-free instalments over six weeks.

Merchant transaction fees: 6% plus 30p per transaction

Interest fee to customer: None

Late payment fee to customer: £6 every seven days, with a £24 cap or 25% of order value, whichever is lower

#4 – Payl8r

Manchester-based Payl8r is tipped to become a UK unicorn in five years with its BNPL platform. The firm uses open banking to vet a user’s affordability, resulting in customers with limited credit history to use the service.

Merchant transaction fee: From 1.4% + 20p for UK cards and 2.9% + 20p for international cards

Interest fee to customer: None

Late payment fee to customer: Up to £30 after 28 days

#5 – Laybuy

Laybuy offers customers the chance to pay six, interest-free weekly instalments. For merchants, it offers all the usual benefits – no fraud or credit risk, instant payment in full and a smooth payment method for customers – but also a merchant dashboard, where you can view customer data.

Merchant transaction fees: Request quote

Interest fee to customer: None

Late payment fee to customer: £6 every seven days with a £24 cap

#6 – DivideBuy

DivideBuy offers a longer interest-free payback term than a lot of its competitors – from two to 12 months.

Merchant transaction fees: Transaction fee plus monthly product fee – request directly

Interest fee to customer: None

Late payment fee to customer: See credit agreement

#7 – Zilch

Zilch allows customers to pay four times over six weeks or pay in full to get 2% cashback in its Zilch Rewards product.

Merchant transaction fees: Request

Interest fee to customer: None

Late payment fee to customer: None

More on payment methods

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Dom Walbanke

Jaeden Harber

Dom Walbanke is a feature writer for Growth Business and Small Business, focused on matters concerning start-ups and scale-ups. He has also been published in the Independent, FourFourTwo magazine and various...

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