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Buy Now Pay Later for a frictionless Online Store Checkout

Buy Now Pay Later

While there are several frictionless payment methods to help your customers checkout, the "Buy Now Pay Later" option is worthy of note as it bypasses credit cards all the while you have the likes of PayPal offering several options for express checkout. The options in some cases do not hit your credit score, and being able to pay overtime on a different payment plan frees up your credit. Mobile Apps on digital wallets allow users to manage the payment method and keep track of their purchases. Paying over time gives the audience the confidence to manage their finances while getting what they need, and that reduces friction as their confidence is in a good place. Let's explore how this impacts your online sales below.

Guest Checkout enhancements

It is reported that up to 24% of checkout abandonment is based on the unwillingness to create an account on your online store when acquiring products or services. Gathering an Email address and other personal details might have value in data mining your customers, however, you might lose a sale over it - therefore the ability to take their transaction regardless adds to your bottom line. To encourage a sign-up think about encouraging them to get something in return, such as a coupon code or join the rewards program.

Payment methods and options

Back in the day when your credit score ranges limited to your spending via traditional Visa/MasterCard, American Express, Discover, and other card issuers - your shopping experience was restricted to their approval based on one system. The information in your credit (free) credit score allowed you to manage and help build your credit as your income improved. Nowadays, payment methods have disrupted these types of credit methods via Digital Wallets and Online Payments such as PayPal and Venmo. Personal users having to not rely on one online payment method such as credit cards gives them the choice to manage their monthly payments as well boost their confidence when spending on an online store.

There are two ways to offer "Buy Now Pay Later" in an online store. Either you offer the Digital Wallet that has its own, or offers a distinct one on your online store.

Apple Pay, Amazon Pay, Google Pay, PayPal, and Venmo are key Digital Wallets that have their very own "Buy Now Pay Later" programs, such as PayPal offering their very own PayPal Credit, PayPal Pay-in-3 PayPal Credit Pay in 4 months at 0% interest. This is better than layaway payment plans since the user gets to enjoy their purchase right away. Additionally, where it used to be cash or card, with a good credit score you can apply for the digital wallet credit and have the flexibility of payment at checkout.

Klarna offers on-site "Buy Now Pay Later" within 30-days, and costs a small percentage (1%) of the purchase to do so. This method of payment gives the user additional flexibility to use their bank if they are trying to time their money within the 30-day limit.  Example on a £2295.00 purchase below.


Buy Now Pay Later penetration and growth

It is reported that Gen-Z in 2019-2021 showed a growth rate of 600%, and Millenial use is now 3 times over the same period. In older generations, 17.2% of Gen-X shoppers have used the payment option, and 6.2% of Bay Boomers have engaged with it.

The Buy Now Pay Later appeal

With the banks and lending institutions, credit accounts were applied for based on credit history, and a credit limit that was based on income and expenditures would be calculated to keep the applicant in a place of good standing. Risk analysis would take place with government laws being introduced to regulate lending institutions, as well as backing the terms of collections in case of default. This meant that the application process took time and was quite rigid. A credit card offers to lend as they charge interest, which is also applicable for the likes of PayPal Credit. However, PayPal has a lower limit so as to lower the risk and allow greater flexibility in the application and lending options. PayPal sees the value of its users' freedom to receive and pay out as well as work through claims by resolving the dispute in managing both sides. Credit Card institutions do not have that level of transparency and chargebacks are stacked against the online store owners - so the incentive is greatly pushed to users as well as vendors.


Digital Wallets have come a long way, with larger tech institutions competing with Credit Card companies in the use of their offerings. The frictionless advantage at checkout with Digital Wallets, as well as the tools provided to users and vendors which manages transactions, lowers the cost of lending as well as give customers flexibility of payment - the Credit Card companies are being pushed out to only reside into the higher risk and higher credit limit space. The penetration of digital wallets via smartphone devices, its' IOS/Android Apps has a clear advantage, and Credit Card institutions haven't caught up to its new competition. To set up your Digital Wallet options on your online store, feel free to reach out to us if you have any questions at


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