The number of buy now pay later apps continues to increase as demand for financing services increases. The global pandemic has severely affected the average person’s purchasing power, but that hasn’t prevented most from splurging on things they like.
Buy now pay later apps allow you to buy whatever you like, but instead of paying the whole amount right away, you can pay the amount in installments. In most cases, the installments are usually interest-free, but that depends on the payment plan.
In this article:
- What is Buy Now Pay Later
- What Are the Best Buy Now Pay Later Apps in 2023?
- When Should You Use Buy Now Pay Later Apps?
What is Buy Now Pay Later?
Buy now pay later services have seen a surge in popularity, and if you are thinking of expanding the payment options on your website from standard credit card processing, you should definitely consider adding these apps on your checkout page.
The concept of “buy now pay later” is relatively similar to the older method of layaway shopping. However, with the older method, possession of the item was only granted when the shopper had made the relevant installments and completed their payments.
With third-party BNPL companies, you can take possession of the items right away, and then pay back the amount based on the interest rates agreed upon. The method is fairly simple.
What Are the Best Buy Now Pay Later Apps in 2023?
In the following article, we have compared nine of the best buy now pay later apps for you to choose from.
1. Afterpay – Best Overall BNPL App
Afterpay is a popular buy now pay later service that was founded in 2014. The company offers services through several regions: Australia, UK, USA, Canada, and New Zealand. The service allows users to divide their purchase into four interest-free payments.
Afterpay has become quite popular amongst retailers as well, as it sets smart credit limits, while still giving buyers increased control over their purchases. Instead of paying upfront for large purchases, Afterpay allows you to break the cost down into four equal payments.
You don’t have to worry about a credit check either – the company doesn’t perform any. Each new user’s spending is capped at $500 maximum. You must have a credit or debit card to sign up for Afterpay however, and you need to be over 18. Your minimum order value must be greater than $35 too.
Compared to other buy now pay later services that work with credit bureaus, Afterpay is much simpler. It offers instant approvals, and is suitable for people with a lower credit score, or those who usually can’t get a credit-based approval.
Instead of using a credit card like Visa, you can use Afterpay, especially if you don’t have a credit history. There’s no “down payment” to pay either; the cost is simply broken down into four installments that must be paid over a period of six weeks.
More than 3,300 retailers throughout the USA support Afterpay. It allows you to break down your big purchases into installment amounts that you can pay over a period of 36 months. Interest rates vary from 10-30% APR.
However, if you are unable to pay the amount in the standard period of six weeks, the company will tack on late fees ($8) per week and freeze your account. The late fee is capped at 25% of the total purchase price, however.
Pros
- Major discounts on luxury purchases
- No credit checks
- Instant decision on approval
- Virtual cards available
- Spending limits can increase
- Email and text reminders for payments
- No fee if you clear the payments on time
Cons
- If you’re not careful, Afterpay will land you in heavy debt.
- Late fees rises quickly
- Each purchase requires prior approval
- Not as big as other BNPL services
👉 Read our Afterpay review.
2. Affirm – Best Buy Now Pay Later App for Beginners
Affirm is one of the most popular BNPL apps that you can use to break your purchase amount into a smaller installment payment. Affirm essentially gives out loans over fixed payment schedules. The company doesn’t charge a fee, so each user will only pay for the amounts that were originally agreed upon.
There’s also a dedicated Affirm app that customers can use to buy goods online from more than 11,000 retailers. Like Afterpay, Affirm can also help you get virtual credit card numbers so you can buy from any retailer that accepts Visa cards as well.
The interest charges for Affirm are usually variable, starting from 0% and going all the way to 30%, which is definitely greater than what most other credit card providers charge. Payment schedules vary, going as high as 36 months. Or, you can also pay in four equal installments.
The good thing is that you don’t have to worry about any prepayment charges in case you pay the loan amount early. There’s also no late fee in case you fall behind on your payments. Interest is always fixed, and you don’t have to worry about compounding (as is the case with credit cards).
Affirm does report to Experian, one of three major credit bureaus, in case you fail to make payments on time. This could impact your credit score. Affirm also conducts a soft credit check before approving payments.
However, like Afterpay, Affirm isn’t suitable if you want to build credit. It doesn’t always report on-time payments, and because it’s so easy to rack up debt with BNPL services, you might not want to use it if you already have other outstanding loans.
The maximum purchase limit that Affirm allows is $17,500, and each transaction must be pre-approved. Affirm automatically pulls payments from your bank account as per the agreement in your contract.
Pros
- Affirm doesn’t charge a fee
- Offers no-interest loans
- Pre-qualification available
- Supports more than 11,000 retailers
Cons
- Doesn’t report to credit bureaus
- Interest rate could be higher
- A soft credit check might be required
👉 Read our Affirm review.
3. Sezzle – Best BNPL App for Bad Credit
Sezzle doesn’t bring anything new to the buy now pay later arena. It offers standard financing at plenty of online retailers, with the first payment being made at the time of purchase. To use Sezzle, users need to create a Sezzle account.
Then, if you buy from a participating retailer, you just need to select Sezzle as your payment method on the checkout page. Like others, Sezzle offers interest-free loans. But, it also allows you to build credit in the long run using their Sezzle Up service.
Its services are restricted only to the USA and Canada, however. Sezzle is suitable for larger purchases, as you can break down the total cost into four easy installments. The repayment period is the standard six weeks.
The first installment, also considered a down payment, must be paid at the time of purchase, with the remaining three paid after every two weeks. You can also break down your online purchases into monthly installments.
Sezzle doesn’t have any hidden fees, but they will charge your account if you do not make your payment on time, or if you reschedule payments twice. The late fee is $10 for each delay.
Like other BNPL services, Sezzle doesn’t run a hard credit check. You can get started quite easily, and use its services at more than 34,000 participating retailers.
Sezzle doesn’t have a rewards program, so don’t expect a cash back offer or any such benefits. If you are bad with money, this might not be a good option for you, as the late payments quickly stack up.
Pros
- A rapidly growing database of participating retailers
- Doesn’t report to credit bureaus
- All loans are interest free (no APR)
- You get one free reschedule per order
Cons
- No rewards
- $10 late fee (higher than several others)
- No long-term loans
- Customer service is slow
4. Klarna – Best BNPL App for Collecting Rewards
Klarna is a Swedish buy now pay later service that’s available in the USA, UK, Netherlands, Denmark, Germany, Austria, Finland, Norway, and of course, Sweden. Their services are available in one form or another in 17 countries.
The company was founded in 2005, so it’s one of the oldest players in the business. It’s accepted at all major retailers like FootLocker, Sephora, Etsy, Macy’s, and thousands of other online retailers.
These guys pioneered the “Pay in 4” payment plan, and you can also use it on a marketplace like Amazon. Companies such as Apple also allow you to make monthly payments if you buy using Klarna.
Klarna is great if you are a big fan of online shopping, and they have a mobile app for both the Android and iOS platforms. Just download the app and search for a big retailer like Walmart, and you can start shopping.
Klarna’s most popular plan is the Pay in 4, though they also have a Pay in 30 and a “pay now” solution. There’s no interest levied if you choose any of these plans. However, Klarna offers financing for up to 36 months, ranging from 0% to 29.99%.
Klarna is suitable if you are interested in making a big purchase. If you choose six months’ financing, for instance, expect to pay an APR of around 19.99% on all standard items.
Klarna can be used at any US retailer that accepts debit or credit cards. The Klarna app is extremely intuitive, and is suitable for people who do not qualify for credit cards.
Like most other names on this list, Klarna does conduct a soft credit check if you choose their Pay in 4 option. However, if you opt for financing, the company may conduct a hard credit check (which shows up on your credit history).
Pros
- No membership fee
- Accepted at almost any retailer
- Flexible payment options
- No interest on Pay in 4 and Pay in 30 plans
- Excellent mobile app
Cons
- Conducts a soft credit check
- Missed payments are likely to be reported to all three major bureaus.
- Late fee ($7 per delay, or $35 if you borrow for the long term).
👉 Read our Klarna review.
5. PayPal Credit – Best BNPL App for Online Shopping
PayPal Credit is PayPal’s BNPL offering. It’s also fairly good, though it works slightly differently. This is a “line of credit” offered by PayPal in tandem with their partner bank: Comenity Capital.
Whenever you apply for Credit, you just have to provide your last four SSN digits, and your date of birth. It takes a few seconds to get approval, which instantly gives you $250 in credit.
Perhaps the best thing about PayPal Credit is that it works on any platform that accepts PayPal. It also allows you to hold off on repaying the amount for up to six months without worrying about interest charges.
PayPal doesn’t charge an annual fee for using its line of credit, but they do add a late fee if you miss out on a payment (up to $35). Interest rates are also variable, though usually similar to what credit card issuers charge.
For ecommerce store owners, this is a great choice, because if you already accept PayPal on your store, your customers can pay via PayPal Credit.
It’s another excellent option to add on your checkout page. PayPal Credit also incentivizes users by offering them a $10 cash back bonus from time to time. However, there’s not much else to offer.
Like most other services, PayPal Credit also conducts an initial credit inquiry, but they don’t really report your activity to credit bureaus. Thus, you don’t have to worry about your credit score taking a hit.
For ecommerce store owners, this is just another reason to add PayPal as a payment gateway to your store!
Pros
- Instant approvals
- No credit reports to bureaus
- You can hold off on payments for up to six months at no interest.
Cons
- Only $250 worth of credit
- Hard credit inquiry when you sign up
- Late payment fee is relatively high (19.99% APR)
- No major bonuses
👉 Read our PayPal Credit review.
6. Splitit
Splitit is a popular borrowing app because it is quite different from your average BNPL service provider. The application process is incredibly simple, and you don’t have to worry about interest rates or late fees.
Splitit requires you to have a debit or credit card when you sign up. It authorizes your payments and reserves the purchase amount on your credit or debit card. If you pay using a debit card, you can buy anything worth up to $400.
If you don’t have credit for covering the entire purchase, Splitit will reject the transaction. If you do, the amount is reserved, and you just pay the first installment. Ecommerce businesses have the option of selecting the minimum charge and the maximum number of monthly installments.
You can pay monthly payments in 3, 6, 12, or 24 installments. You can also set up automatic payments, so your credit card is charged every month. Keep in mind that your credit card issuer may levy interest or charges depending on your agreement.
Splitit doesn’t impact your credit score either, so it’s an excellent choice. Just know that you can’t use Splitit in stores; it’s only available for use on online platforms.
Splitit has become incredibly popular among online merchants, and can improve conversion times dramatically for ecommerce retailers. Splitit conducted an internal study which showed that 67% shoppers would be more willing to make high-ticket purchases if they had the option to pay in monthly installments.
Pros
- No interest charges or late fees
- No impact on credit history
- No use fees
- No credit checks
- You can make prepayments
Cons
- Payment structures pale in comparison to other services like Klarna.
- Their list of participating merchants is also limited.
- Amount is held on your credit or debit card.
- It only supports Mastercard and Visa.
- You can’t use it to build credit.
7. Perpay
Perpay takes a fairly simple BNPL service that’s been around for quite a while now. The company is based in Philadelphia, Perpay extends its services throughout the USA. Their website is incredibly simple, with relatively little information about spending terms.
Like PayPal Credit, Perpay also extends you a line of credit depending on your bank information and direct deposit. This can be used to buy virtually anything you want. The company then deducts the amount in installments from your bank account each week.
Perpay has a dedicated shop on its website that you can use to buy items from popular brands like Nintendo, MCM, Michael Kors, Apple, Samsung, and many others. Items ship quickly and the whole process is fairly straightforward.
However, the good thing about Perpay is that it can help you build credit too. In 2020, the company partnered up with Experian to try out its new product, known as Perpay+.
It costs an additional $2 a month, and will enroll you in a separate program where the company reports on your payments to help users build credit.
If you are recovering from a bad credit score or just trying to build one up from scratch, using Perpay is a no-brainer. It’s a fantastic initiative that can help users get relaxed payment conditions while building credit simultaneously.
Apart from Perpay+, there’s very little that Perpay does differently. It’s not a payment option that you can integrate on your website, however.
All users must seek approval and then have an approved spending limit. For users with a history of timely payments, the limit can increase.
Pros
- Helps users build credit
- Payments are deducted automatically
- Very easy to set up
- Interest-free payments
Cons
- Very limited support options
- In some cases, the approved spending limit is very low ($100-$150).
- Orders get declined at the last minute from time to time.
- Users have reported the company randomly asking for more information.
8. FuturePay
FuturePay is a digital credit solution designed solely for ecommerce store owners. This is a basic buy now pay later service that helps merchants boost sales and bring down shopping cart abandonment rates.
As a merchant, integrating FuturePay into your store could increase consumer LTV, and according to the company’s research, attract up to 37% more first-time buyers.
FuturePay uses their proprietary MyTab checkout solution. Buyers just have to apply once, and can use MyTab on all supported stores. Shoppers get approval in seconds, and it opens up a line of credit.
The real reason why you might want to consider FuturePay is because the company has a pretty dedicated user base, and that might lead to higher repeat purchases. There is a performance-based merchant fee involved, though. That’s a steep 4.95% of the order value.
While FuturePay is available to merchants across the globe, the service is restricted to shoppers only in the US, so if your market is elsewhere, this might not be such a great solution for you.
FuturePay wires money directly via ACH into the merchant’s bank account. If you are looking at other payment options to add to your store, FuturePay is a decent choice.
Pros
- Customers don’t need a credit card.
- Instant approvals for payments
- Flexible monthly payments starting from as little as $25 a month.
- A reporting feature on the website allows you to check sales and payments.
Cons
- Steep merchant fees of 4.95% for every order.
- It charges shoppers $1.5/month for every $50 of their carried balance.
- Not very popular amongst most shoppers when compared with other options.
9. Zip (previously QuadPay)
And finally, there’s Zip. Previously known as QuadPay, Zip uses the standard “Pay in 4” formula that’s incredibly popular with other buy now pay later services. It allows you to break your payment amount into four equal installments that are completely interest-free.
First, you must download the app. Then, you can search for your favorite stores, find what you need, and at checkout, just select “Pay with Zip.” The app automatically fills your payment information, and you are good to go.
If you want to pay in store, you must select the “in-store” tab in the app. Select your payment plan, then add it to your Apple Pay or Google Wallet. Just use your wallet to fund the purchase. You can also use a Zip virtual card for making payments.
And, as for using ZIp at Checkout, you must search for the Zip logo at select retailers, which include GameStop, Newegg, TickPick, and FashionNova, among others.
For each payment you make, Zip charges a $1 convenience fee. You also get instant approvals (the company doesn’t do hard checks).
It seems easy, but the late fees could stack up quickly. They charge an initial late fee that’s either $5, $7, or $10, depending on your location. Then, you also have to worry about any additional interest or late fee charged by your credit card as well.
Pros
- Interest-free payment plans
- Flexible payments either in-store or online
- Approvals are generally quick
Cons
- Prospect of late fees on Zip and interest fees on your card.
- Every purchase requires a prior approval
- You won’t find the Zip logo on every major retailer.
When Should You Use Buy Now Pay Later Apps?
Managing your money is quite difficult. With the rising popularity of buy now, pay later apps, money management might become even more difficult. The prospect of breaking your payments down into flexible installments seems quite appealing, but it doesn’t take long before you find yourself making payments every other week.
Eventually, you might find your accounts running in the red, and that’s when the trouble starts. Therefore, you should only use such apps when making a big-ticket purchase, or when you absolutely need to buy something.
It’s not all doom and gloom, though. Some apps, like Perpay, can help you increase your credit score as they report to credit bureaus. Ideally, if you have a decent credit score and know how to manage your money the right way, using these apps will only work in your favor.
It’s a win-win situation for all parties, as the merchant gets a sale that might not have been likely otherwise, the customer gets their product, and the app receives a fee for managing the transaction.
We compared several things in our analysis, including fees, APR, credit reporting and checks, as well as merchant availability to compare these buy now, pay later apps.
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