Wearwell began accepting buy now, pay later
payments after receiving a Small Business Impact
Initiative grant from Klarna in 2021. Today,
customers who use Klarna spend about 76% more
than those who don’t, according to the company’s
co-founder and CEO, Erin Houston.
“It just reduces the friction when it comes to
someone adding one more thing to their cart, or
choosing to splurge on that purchase that they
really want,” Houston says.
Buy now, pay later isn’t just for retailers. Alcazar has
seen a dentist and a mechanic accept installment
payments in recent years.
“When emergencies happen, they don’t happen
on payday,” Alcazar says. Buy now, pay later can
allow customers to get the service they need right
away, which means the merchant can perform the
service — and get paid for it — sooner.
WHAT TO WATCH OUT FOR
In December, the Consumer Financial Protection
Bureau launched a probe of five buy now, pay
later providers, including Klarna. Officials cited
concerns about how much debt customers are
accumulating, how these companies use customer
data and whether they adequately disclose their
fees and dispute resolution processes.
Buy now, pay later providers will have to adapt
to potential regulations, says Brett Worick, vice
president of BNPL and point of sale lending at First
National Bank of Omaha. And as this payment
method gets more popular, he says buy now, pay
later providers will need to learn to manage the
risks of these kinds of loans, which may mean their
offerings will change.