The Best Buy Now, Pay Later Apps for Shopify and How to Choose the Right One
If you run an ecommerce brand, you have likely noticed the increased popularity of buy now, pay later services over the last few years. These are apps that you can add to the store which allows the customer to pay for their purchase over time, usually interest free. Some of these services require a soft credit check, but not all.
The beauty of a buy now, pay later service is that it is mutually beneficial to the customer and the business. For the customer, it lowers the barrier to entry for products they want to buy by spreading payments out over a few months. For the business, it can help increase the store’s conversion rate.
If you are on Shopify and want to add a buy now, pay later service to your store, there are a few different routes you could take. You might be wondering what your options are and how to know which of those methods is the best route to take.
In this post, we’ll discuss the top four buy now, pay later apps for Shopify and when they should be used so you can decide which one is right for you.
What are the pros and cons of using a buy now pay, later service for Shopify?
The most obvious benefits of using a buy now, pay later service is that by lowering the barrier to entry for the customer, your store could see an increase in conversion rate. You might also see an increase in average order value— some stats say up to 50%. And this makes sense. If a customer’s total is spread out across four payments, the threshold of what they’re willing to spend can increase.
One of the downsides is that you will have to pay a processing fee. This could be anywhere from 4 to 8%. Another is that you can’t offer this service for subscription products, so if your business relies heavily on subscriptions that is something to consider. Additionally, you might have an odd return experience. Oftentimes you’ll need to process the return and its refund both on your Shopify store and within the app to ensure the customer doesn’t continue to get charged after their return.
The Top 4 Buy Now, Pay Later Apps for Shopify Stores
1. Shop Pay Installments (Powered by Affirm)
Shopify Pay is Shopify’s payment solution and we find that it’s much more integrated and easier to use than other payment options. They have released an installments program powered by Affirm, which is one of the largest buy now, pay later companies out there.
Pros: This is the most easily integrated option, so you won’t have to worry about technicalities or nuances of managing the app. It is by far the easiest to get started with and to manage, so we recommend businesses start here.
Cons: Both the business owner and the customer will likely pay a bit more. Typically buy now, pay later apps charge a 6-8% transaction fee, while Shop Pay Installments’ fees will be a little higher.
AfterPay was one of the first buy now, pay later apps to hit the market and is widely used by merchants.
Pros: AfterPay’s app integrates very nicely with Shopify, so it’s easy to install and create a seamless experience for you and for the customer. AfterPay also offers a marketplace of vendors so that customers can browse brands that use the service. This can actually drive a decent amount of traffic for many brands.
Cons: There is really only one downside to AfterPay, which is that they have lower price limits for what AfterPay can be used for. So if your products are on the high-end price wise, you’ll want to do some research to be sure AfterPay will allow customers to finance your products.
Sezzle is a buy now, pay later app that is a bit newer to the game with interesting features.
Pros: Sezzle offers more features than other apps such as rescheduling payments or higher credit limits for customers.
Cons: They are not an integrated Shopify app, so you will need to use custom code and a developer to integrate it with your store. They are also a little on the expensive side, with the merchant paying a 6.1% transaction fee plus about $0.30 per transaction.
Klarna is slightly different from other services because it was originally intended to be a “try before you buy” app. This concept can be really helpful in ecommerce, because one of the challenges of shopping online is not being able to see and feel the product in person before committing to the purchase.
Pros: Klarna offers features that allow the customer to try the product now and pay later if they like it. Unlike other apps, Klarna pays the merchant for the product, and then it’s on Klarna to collect payment from the customer. They also have a direct integration with Shopify so it’s relatively simple to set up and get going.
Cons: The downside to Klarna is their pricing model, because they charge a transactional fee as well as a monthly fee. However, many brands that sell clothing or accessories that involve sizing still find this “try now, pay later” option worthwhile so the merchant and the customer don’t have to deal with as many returns.
How to Choose the Right Buy Now, Pay Later App for Your Shopify Store
Having trouble deciding which app is right for you? Since there are pros and cons with each, there isn’t necessarily a “best” one to pick. You might also consider offering more than one option in your store so customers can pick which one works best for them. The tricky thing is you don’t want to overwhelm the customer or make it too complicated for you to manage.
Our recommendation would be to use Shopify’s Shop Pay Installments and if you would like an additional option, you could include AfterPay as well. If your store or product line needs could use the features of Sezzle or Klarna, that might be something to consider instead of AfterPay. We would just stick to two apps maximum to streamline the customer’s experience and keep them focused on getting through checkout without distractions.
Overall, all four of these buy now, pay later services could be great additions to your ecommerce store, lowering the barrier for purchase at relatively low cost on your side. If you’re looking to increase your conversion rate and average order value these are worth testing!