Buy now pay later, or BNPL, lets a customer choose to receive a product or service right away while paying for it in scheduled installments over time, or paying the full price at a later date, rather than paying the full amount up front.
BNPL usually works by splitting a purchase into a fixed number of payments, often spread over weeks or months, and sometimes interest-free depending on the plan. Some plans instead let the customer pay in full later. The provider pays the merchant close to the full amount at the time of purchase and then collects the installments from the customer directly, so the merchant does not carry the collection risk or wait for the balance to come in over time. BNPL is most associated with one-time purchases, but it now shows up alongside other payment methods at checkout for commerce and subscription businesses, giving customers a choice in how they pay without changing what the merchant delivers.
Why it matters
Offering BNPL at checkout can widen the group of customers willing and able to complete a purchase, since some prefer to spread out a payment or would rather not put a large amount on a single card. It can also support a higher average order value, since a customer weighing a bigger purchase may be more comfortable going ahead if they can split the cost. Klarna reports that offering its payment options at checkout can raise conversion by around 20%.
Recurly supports Klarna as a BNPL option at checkout, giving customers three choices: Pay Now, Pay Later, and BNPL installments.
How to offer BNPL at checkout
A commerce or subscription business usually adds BNPL as one option among several at checkout:
Confirm your business model qualifies, since BNPL providers commonly restrict this option to B2C transactions rather than B2B billing. BNPL is also regulated regionally.
Add the BNPL option through your checkout or payment integration alongside your existing card and wallet options.
Present it selectively where it fits, since a given customer's eligibility can depend on their location, currency, and the billing interval of what they are buying.
Track how often customers choose it compared with other payment methods, so you can see whether it is reducing checkout friction.
Benefits and examples
Take a direct-to-consumer subscription box business selling a higher-priced annual plan. It might offer BNPL alongside its standard card option for that plan specifically, since the larger upfront cost is where a customer is most likely to hesitate. Someone who would not commit to paying the full annual amount at once may be more willing to go ahead if they can split it into a few payments.
With Recurly's Klarna support, the options a customer sees are chosen based on their location, currency, and the subscription's billing interval. This is available through Stripe Payment Elements as part of Recurly's Third Party Checkout support, and it's currently available for B2C merchants only, since Klarna requires that the business be selling goods or services directly to consumers. The specific options a customer sees are presented dynamically based on their location, currency, and the subscription's billing interval.
Frequently asked questions
Is BNPL the same as a payment plan or financing? It is related but usually set apart by who extends the credit and how it is marketed. BNPL is typically offered at checkout by a third-party provider that pays the merchant upfront and collects installments from the customer, often with simpler, shorter terms than traditional financing.
Can any business offer BNPL? Not always. Some BNPL providers, including Klarna, limit their service to B2C transactions where a business sells directly to consumers, so a B2B billing relationship typically would not qualify.
Does BNPL work for subscription billing, or just one-time purchases? It depends on the provider and integration. Recurly's Klarna support presents BNPL alongside Pay Now and Pay Later options and takes the subscription's billing interval into account when deciding what to offer a given customer.
Why would a customer choose BNPL over a card? Reasons vary. Common ones include not wanting to put a large purchase on a single card, preferring to spread a cost over a few payments, or simply liking having the option even when they do not use it.
