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

Valued at 0.65 trillion in 2025, the pay later market is projected to reach 1.64 trillion by 2031.

A powershift in the client financing space is underway. PayPal Credit, 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.

Of course, in the good ol’ 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 the society came up with credit cards, giving the monopoly over lending to large players like banks.

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 being – it used to be too hard to accurately evaluate credit risk 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 a low-to-zero-interest point-of-sale pay later option. 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 or 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 making payment in instalment option 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 

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. 

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:

• 50% of U.S. adults have used at least one BNPL service.
• BNPL represents 2.3% of the total e-commerce market in 2026.
• 29% of Americans have used deferred payment services for everyday expenses.  
• Merchants offering BNPL see up to a 40% increase in checkout conversion rates and a 20–30% boost in basket sizes.
• BNPL has moved heavily into the service industry, with 10% of Americans using it for vacations.
• Nearly 40% of Gen Z now use BNPL weekly or more, treating it like a standard debit/credit substitute
• 95% of B2B customers now prefer invoice-based flexible payments, yet only 10% of merchants currently offer it.

But it’s not all sunny in the buy now pay later kingdom.

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. 

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:

• The National Consumer Law Center (NCLC) published a “BNPL Bill of Rights” which is used as a framework by states, allowing consumers to sue BNPL providers directly for violations of state disclosure or privacy laws.
• California’s Department of Financial Protection and Innovation (DFPI) requires all providers be licensed under the California Financing Law. This requires lenders to submit to regular examinations and adhere to strict disclosures.
• The New York Department of Financial Services (NYDFS) requires all BNPL lenders to be licensed, to check ability to repay, and sets a strict $8 safe harbor for late fees.
• The European Commission implemented the Consumer Credit Directive II (CCD2) removing the previous “small loan” loophole, meaning all BNPL transactions (regardless of the amount or interest-free status) are now subject to strict EU consumer credit laws.
• The Australian Government passed the Treasury Laws Amendment (Responsible Buy Now Pay Later and Low-cost Credit) Act. All providers must now hold an Australian Credit Licence (ACL) and are legally prohibited from offering credit that causes “substantial hardship” to the consumer.
• The Financial Conduct Authority (FCA) in the UK has finalized its regulatory framework ending the exemption in the Consumer Credit Act, requiring all BNPL firms to be authorized and to conduct mandatory affordability checks on all applicants.

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:

• First, technology opens new horizons
• Then there’s a little period of uncontrolled growth
• During that time some consumers get hurt and regulators catch up
• Post-regulation maturity phase arrives, rules are set, and the new phenomenon is integrated into 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 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, increase purchase frequency, and customer LTV.

Why TurnKey Pay Later

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

Bizmoto

TurnKey Lender for BNPL – Standard and Enterprise

TurnKey Pay Later has two platform editions for BNPL lenders – Standard and Enterprise. 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.

• 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.
• 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. Tens of millions of telecom customers use instant airtime loans embedded into the operations of a country’s leading provider.

• 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.
• This embedded lending platform is user-friendly enough for any business to use it to finance their clients. Multi-language and multi-currency platform that is no-code and easily adaptable to meet every one of your requirements.
• Offers fastest time-to-value: if you need classic Pay Later capabilities, you can be up and running in as little as two weeks.
• 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 Enterprise 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.

Learn more about TurnKey Lender’s Buy Now Pay Later solution.

Final thoughts

Even flying now and paying 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 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.