How to offer pay later financing to customers – in-depth intro to the BNPL industry

Valued at over $500 billion in 2026, the pay later market is projected to reach $1 trillion by 2031. A power shift in the client financing space is underway. PayPal Credit, Affirm, WeChat’s Fen Fu, Alipay, and other trend-setting players started the race as customer finance is moving to the point of sale. 

Letting your clients pay for products or services in several installments if they can’t afford to foot the bill in one go is an idea that has been around since the invention of money.  

In the good old days, it was simple. There was just your shop in the village, and you knew every customer. Keeping a ledger of who owes how much and for what was easy when communities were small. But at some point society came up with credit cards, giving the monopoly over lending to large players like banks.  

Before we continue, wanted to check if you (or your staff) would like this Buy Now Pay Later super guide that goes over everything you need to offer financing to customers in-house

How to offer pay later financing to customers – the ultimate buy now pay later guide

Up until recently, it was almost impossible to offer buy now pay later consumer credit at the point of sale unless you are a bank or a large alternative lender. The reason is – it used to be too hard to evaluate credit risk accurately, and even if you had the capacity for it, underwriting took too long. 

Times have changed. Traditional lending out of branches is riding into the sunset and working with credit digitally is swiftly becoming the new norm. And when a conservative space goes digital, the entry barrier into this space gets lower. 

Customer expectations and online comfort standards are formed by the Ubers and Amazons of the world. And despite their best efforts, most traditional lenders can’t address the current demand for low-to-zero-interest point-of-sale pay later options. This creates an enormous market gap for affordable, seamless, and secure customer finance.  

In the past, you needed immense resources and expertise to start and run a lending business. Now technology has made credit more democratic than it has ever been. Any entrepreneur can partner with a lender like Affirm or even have their pay later program automated and running in-house. Which in our, slightly biased opinion, is a lot better.  

Pay later for lenders and for product/service providers 

If you’re reading this, most likely, you fall into one of these categories: 

1. A finance provider or a payment processor. This kind of business is looking to have their own version of Affirm or Klarna. A project that would let you tap into the booming BNPL consumer lending space, partner with product or service providers, finance their clients and own the customer journey.  
2. Product or service provider that wants to implement a pay later program of their own and not to outsource lending profits and benefits (like loyalty, retention, and control) to a third-party lender. You may be a retailer, equipment manufacturer, healthcare provider, renovation contractor, airline, or any other company that sells a product or a service that you would sell more of if people could pay in installments. For you as a business, the question is whether you want to remain in control of your client’s journey or want to get repaid for the full product/service instantly by a lender. 

Both as a lender and as a provider of goods or services, you may be offering B2C and B2B pay later options.

If you’re approaching buy now and pay later as a lender, you will need to have your margins and loan rates built in a way that you make money on credit. But as a product or service provider offering your own inventory, you’re at an advantage since you make money selling the product, not necessarily from credit itself. So if you as a business owner own your pay later program, you can have very liberal terms (0%, easy qualification, grace periods, etc).  

That said, finance providers, retailers, manufacturers, service providers – we’ve researched and written this piece with all you in mind so keep reading.  

And to make sure we’re on the same page in terms of the benefit BNPL brings a business, here are a few important things you get:  

• Grow your revenue by allowing repayment in installments a powerful and ever-green monetization tool 
• Capture a share of a booming embedded financing market at the beginning of the wide market adoption 

• Increase loyalty and long-term value of your clients and leverage your unique transaction data while making it work for you 
• Establish your role as one of the leaders of the ongoing shift in the marketplace

Sector-specific financing is another development reshaping the consumer financing landscape. Take Dental and Medical Financing Loan Software for example. By providing their patients with convenient financing options, healthcare providers can improve access to healthcare services and alleviate financial stress for their patients.

The retail industry is one of the most active adopters leveraging consumer financing in a big way. Point of Sale Financing is proving to be a promising strategy. By integrating financing options at the point of sale, retailers can facilitate instant financing decisions, enabling customers to complete their purchases without delay.

Home Improvement Finance is another trend fast gaining momentum in the consumer financing landscape. By offering finance to customers for renovation projects, businesses can tap into a larger customer base and drive up their revenue.

Buy now pay later adoption statistics 

The market rules remain stable – products and services don’t flourish unless the customer generates demand. Buy now pay later has been growing at a staggering rate which serves to prove that this change in the lending space has been long overdue. Consumers cite these as the reasons for why they use BNPL instead of credit cards 

• It’s easier to make payments – 45% 
• There’s more flexibility – 44% 
• Lower interest rates – 36% 
• Easy approval process – 33% 
• No need to pay interest – 22% 

And even if you look at it simplistically, it makes a lot of sense that credit should occur at the point of sale instead of a separate place that has nothing to do with the purchase. Of course, traditional lenders will retain control over large loans with complex calculations. But you don’t need Bank of America’s underwriting staff to charge a client (automatically) 4 times instead of 1.   

Here are the most important BNPL statistics to date that you as a business owner need to be aware of: 

• The U.S. BNPL market hit roughly $128 billion in 2026, with adoption now embedded in most major e‑commerce and mobile checkout flows. 
• In 2026 there were an estimated 380 million BNPL users worldwide, of which around 96–100 million were in the U.S.
• In 2026, BNPL made up about 1.5% of total U.S. retail sales.
• More than one‑third of U.S. adults aged 18–34 used BNPL regularly by 2026, making it a key driver of higher conversion rates and average order values for retailers.
• Lenders had tightened underwriting, introduced longer‑term installment products, and adapted to evolving U.S. and EU regulations, pointing toward a more mature marketplace. 

Buy now pay later criticism, regulation, response, and ethical lending  

And as with any exciting new trend, some people take advantage while others fall into their traps. And this is the situation we’re in. BNPL is a relatively unregulated payment method, and now it’s being looked at more closely. Some of the recent stats indicate that: 

• 57% of people say they regretted making a purchase through BNPL because the item was too expensive.  
• 31% of buy now, pay later users have made a late payment or incurred a late fee.  
• 36% of BNPL users say they are at least somewhat likely to make a late payment within the next year.  

With stats like these popping up, people start to accept that the pay later option is not a silver bullet for getting anything you want at a fraction of a price. You still have to pay and as with any credit – if you have too much of it, it can get out of control.  

It is to be said that BNPL can get a bad rep because of occasional predatory lenders who charge savage interest, aren’t flexible on terms, approve BNPL requests even when the client isn’t able to pay, etc.  There’s an active global discussion around the rise of the BNPL trend. Many regulators and organizations claim that this kind of credit product can lead to irresponsible consumerism. 

Which may be a little condescending towards the consumers.  Nonetheless, government agencies start to act: 

• After dismantling the CFPB which protected consumers in the past, state regulators became more active in the U.S. The New York Department of Financial Services brought BNPL under a full consumer‑credit licensing and supervision framework, covering product design, underwriting, disclosures, servicing, and data use.
• In the UK, the Financial Conduct Authority (FCA) extended credit‑regulation rules to BNPL.
• The European Commission has also stepped in, with the EU Consumer Credit Directive review explicitly addressing BNPL and embedded finance, and the European Banking Authority (EBA) publishing supervisory expectations for digital credit products.
• In Australia, the Treasury released a paper on BNPL proposing tailored regulatory treatment, and the Australian Securities and Investments Commission (ASIC) has been actively monitoring BNPL.
• The German Federal Financial Supervisory Authority has issued warnings and guidance on BNPL‑style instalment credits
• Separate European countries are concerned too. In Sweden, the Authority for Privacy Protection (IMY) opened an investigation into Klarna’s checkout service over data‑protection and dark‑pattern concerns.

Regulation is a healthy reaction, especially in areas which can be abused, like credit. And in this light, it reinforces the idea of credit being the force for good. And the processes we’re witnessing are the standard flow of things:

1. First, technology opens new horizons 
2. Then there’s a little period of uncontrolled growth 
3. During that time some consumers get hurt and regulators catch up  
4. Post-regulation maturity phase arrives, rules are set, and the new phenomenon is integrated into our society

The tech-enabled pay later trend is on the 3rd stage of adoption. This financial tool is at the very beginning of its renaissance with plenty of market space left to claim. It’s important for us to note that TurnKey Lender is focused on and emphasizes ethical lending. 

We create solutions used by tens of millions of borrowers around the globe. The platform we offer lenders is based on the latest security, compliance, and privacy requirements. Its goal ultimately is to give business owners and lenders tools to offer their clients fair, fully digital, accessible credit where and how they need it.  

It’s common in our culture to give credit a bad connotation, but a good illustration that showcases BNPL as a force for good is a vet clinic where you can opt in for a pay later option for surgery on your pet which you pay out in 4 months. So you get what you need without maxing out all the credit cards. 

And for an ethical enterprise, pay-later options do make the business more profitable and help it grow. Even if you’re charging zero interest, you still get customer loyalty, retention, increased purchase frequency, and customer LTV.  

Why TurnKey Pay Later for buy now pay later automation

TurnKey Lender automates consumer and commercial client financing programs for payment processing providers, digital banks, ATM networks, ecommerce platforms and large brands like BigPay, Globe Telecom, BizPay, EasyBillPay, StockPay, FCTI, Peppermint, H&R Block and hundreds of other businesses in 50+ countries.  

Every type of consumer and business finance is changing. Agents of change are companies that leverage their transactional data to offer risk-free credit with the best possible UX & UI, fairest terms, and seamless collections. With TurnKey Pay Later you get:  

• Full white labeling of the platform and all necessary adjustments to make lending feel like a native part of your business  
• End-to-end automation of processes from application processing and decisioning to servicing, collection, and reporting 
• Unmatched configuration freedom – from customer-facing UX and decision-making logic to amortization schedules and reporting 
• Multiple AI-based credit scoring models learning from real transactional and customer data allow for lowest possible credit risk 
• Enhancement of the payment services through flexible lending options with the fastest time-to-market 

Here’s what some of our pay later customers say:

• “Thanks to TurnKey Lender we were able to challenge our region’s banking status quo and make the transition from being an e-wallet to becoming a full-fledged digital bank licensed by the government and offering affordable credit to our clients. We’re just getting started and are planning to expand our product range thanks to the flexibility TurnKey Lender gives us. “ 

Chief Product Officer 

BigPay 

• “TurnKey Lender allows any of bizmoto’s 55,000+ qualified agents, bizmoGo riders and registered network members to seamlessly apply for micro-enterprise loans to grow their business.” 

Managing Director and CEO 

Peppermint Innovation 

TurnKey Lender for BNPL – Standard and Enterprise

TurnKey Pay Later has two platform editions for BNPL lenders – Standard and Transformer. You can see from the names that they are aimed at projects of different scale and complexity. But you can be sure that both will help you lower the credit risk, streamline collections and make more sales by offering better terms and user experience.

1. TurnKey Lender currently automates embedded lending for 200+ enterprise clients with 98.5% satisfaction rate. Over 50 million consumer and business borrowers used this platform to get financing.  
2. An e-wallet company became a prominent challenger bank with TurnKey Lender. Aiming at 300x growth TurnKey Pay Later proved the capacity to process over 100 loan applications a minute with huge further scaling potential. 
3. Tens of millions of telecom customers use instant airtime loans embedded into the operations of a country’s leading provider.  
4. TurnKey Pay Later is the company’s solution that automates every part of launching and scaling a client financing program across multiple products, countries, and business verticals.  
5. This embedded lending platform is user-friendly enough for any business to use it to finance their clients 
6. Multi-language and multi-currency platform that is no-code and easily adaptable to meet every one of your requirements. 
7. Offers fastest time-to-value: if you need classic Pay Later capabilities, you can be up and running in as little as two weeks. 
8. TurnKey Pay Later will be natively integrated into the customer journey, your clients will work with you from a functional portal and your transactional data used in credit scoring will reduce your risks while enabling instant decisions. 

TurnKey Pay Later – Standard

The Standard edition of TurnKey Pay Later provides end-to-end automation of the B2C finance lifecycle and is the easiest to use and launch lending platform in existence. It digitizes application processing, vendor management, origination, risk scoring, payments collection, and reporting. The platform’s bank-grade AI under the hood analyzes borrowers and makes correct loan decisions instantly. 

TurnKey Pay Later – Enterprise

TurnKey Pay Later Enterprise is a no-code modular platform that supports both consumer and business lending, allowing for multinational and multicurrency operations. It’s an end-to-end solution that can be used to solve any kind of lending automation challenge, business logic, decisioning flows, and can bring to life any complexity of credit products in minutes. The Transformer edition of the platform is made for unique business cases, yet it makes sure it has all the common modules and features preconfigured, and its time-to-market is second to none. No matter the business model or the scale of the operation – Enterprise can handle it. 

Impact 

• Customer Relationship: Trust is currency in the business world. Offering financing is akin to entrusting your customers, a gesture that sows the seeds of lasting loyalty. In the long run, this can lead to a sustainable customer base that vouches for your services or products. 
• Operational Efficiency: Tailored financing solutions can drastically refine business operations. The construction realm, with its intricate processes and extended project timelines, stands to benefit immensely from customer financing. Here’s an illustrative guide on its transformative power in the construction sector. 
• Diversification: This isn’t about a universal application, but a tailored approach. Industries can mold customer financing solutions to resonate with their specific clientele. For instance, certain business types experience heightened benefits from in-house financing. 

Final thoughts 

Offering customer financing paves the way for an enhanced shopping experience, enabling customers to spread large payments over time, creating a win-win situation for both businesses and consumers. For businesses, this leads to increased sales, higher average order values, improved conversion rates, and heightened customer loyalty. On the customer side, better financial management and an ability to make instant purchases are the chief benefits.

Even “fly now, pay later” is a thing now. We’re in the middle of a huge credit market redistribution. The struggle is going on to see who will own the point-of-sale finance. Who will have the privilege to extend credit to a customer and allow them to pay for a product or a service in installments.

Will it be a traditional bank that implements a pay later program, an innovative lender like Affirm or Klarna, or will it be the business owner themselves? Will it be a few large providers or a myriad of in-house operations? 

That’s yet to be decided.  

All we know is that TurnKey Lender currently automates embedded lending for 200+ enterprise clients with a 98.5% satisfaction rate, and we’d love for your business to become our next big success story.  

Schedule an intro call with us today.