Buy now, pay later changed the checkout game. Your customers want flexible payment options, and you want more sales. Payments like Klarna promise both. But before you jump in, you need to know what you're really signing up for. Each BNPL provider plays by different rules, charges different fees, and leaves you holding different risks.
Understanding BNPL Risk Models for Merchants
Think of BNPL as outsourcing your credit department. When a customer chooses payments like Klarna at checkout, the provider decides in seconds whether to approve them. You get paid right away, they handle collections. Sounds perfect, right?
Not so fast. The devil hides in the details.
Most BNPL companies eat the loss if customers don't pay. Klarna won't come knocking on your door when someone defaults on their payment plan. You already got your money. But this safety net costs you. BNPL fees run between 3% to 8% per sale. Compare that to credit cards at 1.5% to 3.5%. That's double the cost on every transaction.
Then there's the approval game. Klarna gives the green light to most shoppers. Some competitors? They reject two out of three customers. Every rejection is a potential sale walking away. You need to calculate whether higher fees with more approvals beat lower fees with pickier standards. Let’s take a look at Klarna and other major BNPL providers when it coems to merchant fees.
Comparing Major BNPL Providers
Klarna
Klarna keeps things flexible with Pay in 4, Pay in 30, and financing options. You'll pay 2.99% plus 30 cents per transaction to start. The money hits your account fast, and Klarna deals with any payment drama. But watch out. If a customer disputes their credit card charge that funded the Klarna purchase, that chargeback lands on your desk.
Afterpay
Afterpay takes a bigger bite at 4% to 6% per transaction. No monthly fees though. They cap new customers at $600 to start, which might frustrate big spenders but protects you from massive disputed orders. The platform pays you upfront and chases down late payments themselves.
Affirm
Affirm's fees depend on what you sell and your average sale size. Expect 2.9% to 5.99% per transaction. They specialize in expensive stuff and offer payment plans up to three years. The real bonus? Affirm shares risk data that helps you spot patterns in who gets approved and why.
Chargeback Liability Across Platforms
This is where merchants get burned. BNPL handles payment defaults, but chargebacks are a whole different animal.
Picture this scenario. A customer buys from you using Klarna, funding it with their Visa card. Two months later, they called Visa claiming fraud. Guess who's fighting that chargeback? You are. The BNPL provider walks away clean because the dispute involves the original funding source, not their payment plan.
Klarna offers something called Buyer Protection, but it's not automatic. Ship late? No protection. Forget tracking info? No protection. Product description slightly off? You're on your own. Every payment platform comparison shows similar loopholes that shift risk back to merchants.
Fee Structures and Hidden Costs
The advertised rate is just the beginning. Returns cost extra, sometimes up to $15 each time. Converting currency for international sales? That's another fee. Some providers demand monthly minimums whether you make sales or not.
Settlement timing creates another trade-off. Take your money immediately and pay full fees. Wait a few days and save a percentage point. For cash-strapped businesses, that choice isn't really a choice.
Don't forget setup costs. Connecting payments like Klarna to your store takes developer time. Testing takes more time. Maintenance never stops. Small retailers regularly spend thousands getting BNPL running smoothly, then hundreds monthly keeping it that way.
Approval Rates and Customer Experience
BNPL providers judge customers using secret formulas. Credit scores matter less than you'd think. These platforms track shopping patterns, device data, even typing speed. Two customers with identical credit scores might get opposite decisions.
Klarna, Afterpay, and Affirm each have their own quirks. Klarna approves more people but might attract customers who return more stuff. Affirm's pickier approach means fewer sales but potentially better customers. There's no perfect answer.
What happens when someone gets rejected matter, too. Good platforms suggest backup payment options. Bad ones just show an error. That difference could save or lose a sale. Ask providers how they handle declines before signing contracts.
Risk Mitigation Strategies
Protect yourself by setting smart limits. Maybe BNPL only works for orders over $50 but under $500. Find your sweet spot where the math makes sense.
Track everything by payment type. If BNPL customers return 40% of orders while credit card buyers return 20%, you've got a problem. Adjust your strategy based on real data, not assumptions.
Document everything obsessively. Screenshot order confirmations. Save shipping receipts. Archive product listings. BNPL disputes can pop up months later when memories fade. Paper trails win cases.
Some merchants require signatures for BNPL deliveries over $200. Others block BNPL for first-time customers. Test different approaches until you find what works for your business model and risk tolerance.
Making the Right Choice for Your Business
Your profit margins determine everything. Selling t-shirts with 20% markup? Those BNPL fees hurt. Selling jewelry with 200% markup? The fees become a rounding error.
Know your customer, too. Gen Z expects BNPL everywhere. Boomers might never use it. Selling trendy clothes to twenty-somethings demands different payment options than selling tools to contractors.
Product categories matter. Fashion and electronics see massive BNPL adoption. Groceries and subscription services? Not so much. Research your specific industry before committing to payments like Klarna or alternatives.
Start small with pilot programs. Test one provider for three months. Measure everything. Compare results to your baseline. Only expand after proving the model works for your specific situation.
Conclusion
BNPL isn't automatically good or bad for merchants. The math depends on your margins, customers, and risk tolerance. Payments like Klarna can absolutely grow your business, but only if you understand the true costs involved. Higher fees and chargeback risks might be worth it for increased sales and bigger orders. Or they might sink your profits. Run the numbers for your specific situation. Test carefully. Monitor constantly. The businesses that win with BNPL are the ones that go in with eyes wide open.
FAQ: Payments Like Klarna
How do payments like Klarna affect my cash flow compared to credit cards?
BNPL providers usually pay you within three business days, matching credit card timing. The difference shows up in how much you receive since BNPL fees often double credit card rates, meaning less money in your pocket despite similar payout schedules.
What happens if a BNPL customer returns an item after I've been paid?
You process the refund through the BNPL platform just like any other return, and they adjust the customer's payment schedule. Most providers keep your original transaction fee and might charge an extra return fee up to $15, so returns hurt more with BNPL than traditional payments.
Can I offer payments like Klarna for B2B transactions?
B2C dominates the BNPL space, but B2B options exist with completely different terms. Business-focused BNPL involves net-30 or net-60 terms, bigger credit checks, and higher limits since companies buy differently than consumers.
Do BNPL providers share customer data with merchants?
You get names, addresses, and order details needed for fulfillment, nothing more. BNPL companies guard credit scores and payment histories carefully, so you won't see why someone got approved or their history with other stores.
How do fraudulent BNPL transactions impact my chargeback ratio?
Fraud through BNPL still counts against you when customers dispute the underlying payment method. If someone uses a stolen credit card to fund a Klarna purchase, that chargeback hits your ratio just like a direct credit card sale would.
Your Chargeback Shield Starts with Chargeblast
Chargebacks eat profit faster than any fee. Chargeblast catches disputes 24 hours before they hit, giving you time to fix problems instead of fighting banks. Our alerts work with every payment type you accept. BNPL, credit cards, PayPal, you name it. See which orders face dispute risk. Contact customers directly. Resolve issues fast. Keep your money and your merchant account safe. That's what real chargeback prevention looks like.
