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Klarna, Affirm, and Afterpay : Which is best for your e-commerce business?

Since Covid-19, the use of apps like Klarna, Affirm, and Afterpay have skyrocketed. These Buy Now Pay Later services have been incredibly beneficial for e-commerce store owners and have allowed customers to purchase more and pay less upfront. 

Klarna, Affirm, and Afterpay : Which is best for your business?

These apps have a lot in common but the main benefit they all bring to the table is that they make it easier for customers to buy more. When a customer chooses one of these Buy Now Pay Later services at checkout, they will have the option to set up a payment plan (most of the time it’s interest free) and pay for their products over a period of time instead of all up front. 

Buy Now Pay Later services have made it easier for consumers to purchase items when their cashflow had been impacted from the Coronavirus pandemic. So, if you’re thinking that a Buy Now Pay Later service doesn’t align with your business, hang tight and try to think about this objectively. A lot of people (consumers AND merchants) are seeing a ton of success and are enjoying these services.

So what are they?

They’re apps that you install in your Online Store that give customers the option during checkout to split up their payments and pay less upfront. These apps are easy to integrate into your Shopify online store. Ultimately, these apps help you sell more online, increase repeat purchases from your customers, and they take all the end-customer non-payment risk for every transaction. 

Do customers actually use these?

Yes!  According to this study, more than 1/3 of Americans have used a Buy Now Pay Later service by July 2020. And due to the Covid-19 pandemic, 20.8% of them tried it for the first time in 2020. The rise of the Buy Now Pay Later model is directly linked to the pandemics financial consequences, however, these services aren’t going away anytime soon.

Do you remember when layaway was thing? Well, the Buy Now Pay Later is the new and improved layaway. People are starting to use these services for frequent purchase of clothes, skincare, beauty products, electronics, and home goods and their purchasing more than before.

Buy Now, Pay Later is a better option for millennials 

Since a large portion of millennials are extremely cautious about accruing credit card debt, a Buy Now Pay Later solution might be the better option. Only 33% of adults age 18-29 have a credit card according to this study. On the flip side, 87% of consumers between the ages of 22 and 44 have expressed interest of Buy Now Pay Later services. 

Why would an online store want to share their revenue with a Buy Now, Pay Later service?

Well, because you can sell more!

According to Klarna, their platform increases average order value by 41% and increase overall conversion by 30%. 

Want to know a couple other ways you can sell more online? Check out Why your E-Commerce Business needs Email Marketing and How to Improve User Experience on your website.

Everyone’s doing it

Installment payment providers are being used by some of the largest brands across the world including Nike, Sephora, Lululemon, Bloomingdales, Target, Walmart, and many more.

Returns or cancellation policies

While each provider has a different policy, all of these services offer refunds and cancellations, however customers may be charged interest even if the retailer offers a full refund. 

Now that you understand the basics, let's get into each platform and what they have to offer your e-commerce business.


Klarna is best known for their “try it before you buy it” payment model which gives customers the flexibility to try out products before they pay for them. With this service, customers can pay for their order 14 or 30 days after the order is shipped.

Customers are given the option to choose from a set of payment options including paying directly (and up to 30 days later) for multiple interest free rates. For bigger purchases, Klarna allows you to finance with a maximum length of 36 months with multiple payment installations.

To get payment approval from Klarna, your customers will get a soft credit check that checks for credit history, age, salary, etc. 

Note: this soft credit check does not affect your credit score

Klarna charges merchants a monthly product fee, fixed transaction fee, and a variable percentage fee. The fees are dependent on the payment plan that the customer chooses as well as the country. 

A big advantage for choosing Klarna is that even if a customer doesn’t pay all their installments, the Shopify store owner still gets paid in full. 

Klarna claims that with their express button, your customers can check out 3x faster. They even have a pretty neat demo on how the checkout process with Klarna works. 

Klarna's Express Button pricing


Affirm is a short term lender that allows you to spread the purchase cost over a fixed period of 3-36 months with an Interest Rate of 0-30% depending on what set up. 

Affirm is a good option for customers who want to spread the cost of a large purchase over 3-36 months.

Another great reason to choose Affirm for your business is because you’re able to customize your settings to either offer customers longer terms with 0% APR, or split pay on a fixed interest-free schedule.

With Affirm, there’s no need to worry about when you(the merchant) will be paid. Affirm pays merchants within 1-3 business days of purchase.


Just like Affirm and Klarna, After pay is a credit line for customers where they use it to buy items from your store and pay later. 

Your customers can make four equal payments over a six-week period, with the first payment being taken at the initial purchase. If a customer doesn’t pay on time, they will be charged late fees until they’ve paid everything off. However, it’s important to mention that during the six-week period, your customers will not be charged interest on their items.

With Afterpay, you can expect to pay a $0.30 fee per transaction and a commission rate fee of 4-6% (depending on your agreement) that is applied per transaction.

Unlike Affirm and Klarna, Afterpay does not pay the merchant until the customer has received their items.

If you decide to sign up for Afterpay, submit an inquiry on their website and a customer service representative will reach out to discuss your needs with Afterpay.

Buy Now Pay Later platform comparison chart.


All of these Buy Now Pay Later services are great options, however, before you make your decision on which option to choose, it’s important to think about the fees associated with all these platforms, what type of products you sell and what these platforms can offer you, and which platform has the easiest installation (if you’re setting it up yourself.)

Shameless plug: If you need help building your Shopify online store, inquire to work with me here. I’d love to chat with you and see working together makes sense for both of us!

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