The views and opinions expressed on this podcast are for informational purposes only, and solely those of the podcast participants, contributors, and guests, and do not constitute an endorsement by or necessarily represent the views of The Hartford or its affiliates.

You’re listening to the Small Biz Ahead podcast, brought to you by The Hartford.

Our Sponsor

This podcast is brought to you by The Hartford. When the unexpected strikes, The Hartford strikes back for over 1 million small business customers with property, liability, and workers compensation insurance. Check out The Hartford’s small business insurance at

Gene (00:01):

Hey everybody. This is Gene Marks and welcome to this week’s episode of the Hartford Small Biz Ahead podcast. This week, I’d like to talk to you a little bit about buy-now-pay-later services. I’m not sure if you’re familiar with what they are, but let me explain to you what they are and why they could be so important for your business. I mean, listen, some of your customers may not have enough cash readily available to buy your products. Others may prefer not to use a credit card. So, does this mean you’ve lost the sale? Well, some small business owners, many of my clients, they are learning that this may not be the case. That’s because they’re offering buy-now-pay-later as another payment option, or sometimes it’s called BNPL. Buy-now-pay-later is not too different from those layaway plans.

Gene (00:45):

Remember that your grandparents used to have, they would buy like a sofa. They would put a down payment and then they would pay it off over a period of time. It’s kind of the same thing, now. Our customer buys an item in your store or at your business and after making a deposit on the item, they pay it off, usually over the next two to 12 months and the customer pays no interest at all, during that payment period. Consumers happen to love it. Recent research from one marketing agency says that before the holidays, approximately 60% of U.S. adults have used it when buying products and of those who have used it, 80% planned on used using it during the holidays for gift buying. So it’s very, very popular. It’s also really popular among younger buyers, particularly Gen Z and younger millennials. With more than half of them saying they bought a product on social media using the option.

Gene (01:35):

During the holiday season, according to Adobe, revenues from buy-now-pay-later plans, rose 21% from the previous year. So these things are, they’re really, really popular. I spoke to one client of mine in the Philadelphia area. She’s like a marketing manager at David’s bridal. They sell wedding gowns and other things for brides for their weddings. She told me that they’d be using buy-now-pay-later services for more than 16 months and with great success. She said that they’ve seen increased adoption and conversion with their buy-now-pay-later options. She finds that the signup process is quick and it’s easy. And the customer experience is pretty seamless from the moment somebody walks in, visits their website, to the moment that that person checks out. So it’s a payment option that my client’s been using now for, like I said, 16 months and they’ve expanded it to 300 of their locations.

Gene (02:26):

Now it’s not like, you hear 300 locations that sounds bigger. This is not like for bigger companies, just for them, it’s for smaller businesses like yours as well. And let me explain to you how it works. So, you are say a retailer or a store or a you’re a business that’s customer facing. You sign up with a provider. Now, some of the big, more popular providers like Afterpay, Affirm, Klarna, PayPal Credit, Zip, those are some of the bigger, well known buy-now-pay-later providers, right? They get you set up. And when it comes time for a customer to purchase, the customer can either choose to use, buy-now-pay-later, or just pay by a credit card or cash, right? So the service is a quick online credit check, relying on that…

Gene (03:12):

Customer’s credit history. You as the business owner, you get paid in full right upfront, and the customer then leaves with the product and the commitment to paying off the purchase. However long that payment term happens to be. I mean again, if you’re a small business, the offering gives your customers more payment options, helps you sell your products to customers who might otherwise have purchased. I mean, many are either they’re crediting buy-now-pay-later with generating even more revenues during the holidays, which is really, really good stuff. Now let me tell you what this cost. Generally, the cost of the transaction is around what you would expect to pay for a credit card transaction, one and a half to about 3%, according to the Kansas City Federal Reserve, although some services and you have to be careful, charge as much as 8% on a service, on a transaction.

Gene (04:02):

Now, that might sound high, but remember these are sales you might otherwise not be making. So, as mentioned, customers they pay no interest right for the period of their loan, but be careful cuz if they don’t pay the amount back at the end of the loans, they could be subject to significant penalties in interest as well as potential damage to their credit. So be cautious about this. It’s not like it’s damaging you as the service, as the person selling the product, but you wanna warn your customers about this and be aware. I mean the government is starting to get involved in some of these services. The consumer financial protection board have recently raised several concerns about buy-now-pay-later offerings because they’re concerned that consumers, particularly the younger consumers don’t know all the facts about a pile on too much debt…

Gene (04:47):

Don’t pay off the loans within a period of time. And then they get dinged for some serious penalties. So it’s really important to make sure that your customers are aware of all these risks. But that said, it’s tough to argue the value of these services. I mean, they have a huge potential impact, not only in the experience of your customers, but also on the potential revenues for your business. So be aware of buy-now-pay-later. Some people, they don’t wanna use a credit card. They don’t want to use cash, but they want the ability to not have to pay right away, but pay something off over a period of time. These services have really grown in popularity and it’s something that I think your business really should be offering this year. So sign up and look into it. Hope you enjoy this piece of advice on the Hartford Small Biz Ahead podcast. Again, my name is Gene Marks. If you’d like more advice or tips or help, or to listen to some of our previous podcasts, please visit us at That’s Again, my name is Gene Marks. Thanks for joining me this week. We’ll see you again next week with another tip to help you run your business, take care.

Download Our Free eBooks