Buy now, pay later at the counter: does it fit a small store?

Should a small store offer buy now, pay later? For most neighborhood stores, probably not yet, but it depends on what you sell. Buy now pay later for small business means a third-party lender pays you for the purchase, and the customer pays the lender back in installments. It's common for larger purchases online. At a corner store with small tickets, it rarely fits.

Still, customers hear about it everywhere, so it's worth knowing how it works.

How does buy now, pay later work?

Buy now, pay later, often called BNPL, is a type of short-term financing. A BNPL company approves the customer at checkout. The customer pays a portion up front or nothing at all, and repays the rest in scheduled installments.

The merchant usually gets paid by the BNPL company, minus a fee, shortly after the sale. The BNPL company takes on the risk that the customer won't repay.

For the customer, the appeal is spreading out the cost. For the merchant, the appeal is that some customers may buy more, or buy something bigger, when they can pay over time.

This is financing, so it comes with consumer protection rules and disclosures that the BNPL company handles. Rules vary by state, so check your state and local requirements.

What does it cost the merchant?

BNPL providers generally charge the merchant a fee on each purchase. Those fees are often higher than typical card processing fees, because the provider is paying for the financing and taking on the credit risk.

Here's a hypothetical to show the shape of it. Say a BNPL fee on a $300 purchase were noticeably higher than the card fee on the same sale. If that purchase wouldn't have happened without BNPL, the extra fee may be worth it. If the customer would have paid with a card anyway, you've just paid more for the same sale.

That's the key question. Does BNPL bring you sales you wouldn't get otherwise?

Which stores does it fit?

BNPL tends to fit businesses with higher-ticket items where customers weigh the purchase.

Electronics and phone shops selling devices.

Furniture and appliance stores.

Specialty shops with pricier products, like certain beauty tools or equipment.

It fits poorly where most sales are small. A $6 snack run or a $25 grocery basket doesn't need financing, and customers won't look for it.

If you run a convenience store, bodega, or grocery, BNPL is unlikely to move your numbers. If you run a phone repair shop that also sells devices, it might be worth a look for the device side.

What should you ask before offering it?

If you're considering BNPL, ask plainly.

1. What's the fee per transaction, and does it change with the purchase amount or plan length?
2. When and how do I get paid?
3. How are returns and refunds handled?
4. How are disputes handled, and who deals with the customer?
5. Does it work at the counter, or only online?
6. Does it connect with my POS, or is it a separate step?
7. Are there monthly fees or minimums?

Compare that with what you pay for regular card sales. And think about whether your customers are asking for it.

BNPL isn't something to assume your current payment setup supports. Ask the NRS Pay team what your setup supports. For in-store card acceptance, you can learn more about NRS Pay and its integration with the NRS POS. The FTC's small business guidance covers general practices when working with outside financial service providers.