Should your business offer Buy Now, Pay Later?

Buy Now, Pay Later (BNPL) is undoubtedly one of the fastest-growing developments in South Africa’s payment landscape. While card payments remain the preferred option for online purchases, the use of BNPL products reportedly doubled between 2024 and 2025. According to the same report, BNPL is the most requested new payment method, with 34% of consumers asking merchants to implement it.

At a practical level, BNPL allows customers to purchase goods by paying a small amount upfront and settling the balance in instalments over a short payment cycle – usually weeks – without interest if payments are made on time. Providers such as Payflex, PayJustNow and Happy Pay generally pay the merchant in full upfront, while taking on the responsibility of collecting instalments from the customer. This is a key distinction from traditional credit models and one of the main reasons BNPL has gained traction so quickly.

To understand its appeal, it is useful to look at what came before. Until relatively recently, retailers – particularly in sectors such as electronics and furniture – relied on 12-, 24- or even 36-month instalment options to make higher-ticket items more accessible. While effective, these longer-term credit arrangements often involved lengthy approval processes and higher barriers to entry for consumers. BNPL, by contrast, is designed for simplicity and short-term affordability.

For small businesses, offering BNPL could potentially reduce cart abandonment, increase average order values and open access to new customers. In a tough economic environment, consumers are increasingly cautious with cash flow, and spreading payments over a few pay cycles can make a meaningful difference to buying decisions.

However, adding a new payment option like BNPL requires careful and thorough consideration. The first question to ask is whether BNPL aligns with your customer profile. Businesses selling discretionary or higher-value items online are more likely to see immediate benefits than those offering low-cost, high-frequency purchases. Understanding how your customers currently pay, and why, is essential before introducing any new method.

The second consideration is cost. BNPL providers typically charge merchants a higher transaction fee than standard card payments. While this may be offset by increased sales or higher basket sizes, the numbers need to work for your margins. For small businesses operating on tight spreads, even modest fee increases can erode profitability if not carefully managed.

There are also broader strategic and moral considerations. BNPL can drive growth, but it should support sustainable growth. Encouraging customers to spend beyond their means may deliver short-term revenue but could damage long-term relationships if not handled responsibly. Many consumers are also unaware of potential late payment fees and the implications of missed payments, and with BNPL still largely unregulated in South Africa, consumer protection and legal recourse remain limited.

Choosing a reputable payment partner that integrates seamlessly, conducts appropriate affordability checks and offers solid customer support is therefore critical. A payment partner will become an extension of your brand, and a clunky or unreliable experience can undo months of hard-earned customer trust in a matter of seconds.

That said, for many small businesses, the decision to offer BNPL may make sense as part of a broader, flexible payment mix. Afterall, successful businesses are often those that offer the most seamless customer journey. With payment being one of the final, and most critical, of those steps, you want to be sure you’re getting it right.

Jeremy Lang, Managing Director at Business Partners Limited.

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

BUSINESS REPORT