About 60% of U.S. shoppers used a split payment option in the past year, according to data collected by PYMNTS. 

Split payments or installment plans such as buy now, pay later (BNPL) give consumers the ability to pay the cost of a purchase over multiple installments. 

PYMNTs found three in five shoppers used a BNPL option when shopping in the past 12 months. 

“This growing popularity has captured the attention of merchants,” a PYMNTS article says. “Seventy-eight percent of them told PYMNTS Intelligence that they plan to enhance their use of installment plans, while 39% of acquirers, the entities that enable merchants to offer these plans, said they plan to do the same.”

As BNPL becomes more popular, the option has started to expand to small businesses, according to a Nerd Wallet article. It said that as of 2022, about 55% of local businesses had started offering a pay-later option online and 5% were offering an option in-store. 

As collision repair shops report more short payments from insurers, causing higher out-of-pocket costs for consumers, BNPL options could ease the financial burden on consumers. 

PYMNTS reported in 2022 that consumers were using BNPL options to pay for deductibles for collision repairs.

The same article said a service department at Momentum BMW in Houston, Texas started seeing an uptick in customers declining repairs, such as replacing tires, because of cost. It added a BNPL option in 2019 and said the decline rate dropped from 21% or 22% to 13%. 

A recent Fit Small Business article reviewed BNPL apps that work with small businesses. It found Klarna, Affirm, Paypal Pay Later, Afterpay, Zip (formerly Quadpay), and Splitit to be the best options. 

An American Express blog post says small businesses face pros and cons when offering BNPL options. 

American Express says the pros include customers spending more because they have more options offered. It also says customers can view the flexibility as a business committed to their needs. Customers also could see the option as a sign the business is modern and forward-thinking. 

“Customers value choice and convenience, and staying on the cutting edge of payment options is vital,” the blog says. 

A possible financial con to offering a BNPL option is the provider will pay the business in full at the time of the transaction but there could be transaction fees that squeeze profit margins, according to American Express.

Businesses should research BNPL options and if they work with already existing point of sale systems, the blog post says. Updating a computer system to offer the option could be costly and timely, according to the post.  

American Express also says that a consumer could inadvertently blame a business because of a bad experience it had with a BNPL app. Businesses should research BNPL app reviews and understand how their processes work ahead of using one.

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