At Beacon Payments, we do not offer or support BNPL solutions, but we believe in keeping merchants informed about industry trends. In this post, we’ll explore how BNPL works, why it’s gaining traction, and the reasons you may want to think twice before implementing it in your business.

What Is BNPL and How Does It Work?

Buy Now, Pay Later is a payment option that allows customers to make a purchase and pay for it over time, usually in interest-free installments over a few weeks or months. While customers enjoy flexibility, merchants get paid upfront by the BNPL provider (minus a hefty processing fee), and the provider takes on the repayment risk.

This setup sounds appealing—but it comes with costs and complications that often outweigh the benefits, especially for small businesses.

Why BNPL Is So Popular with Consumers

• It’s fast and easy—no credit checks or lengthy forms
• Makes purchases feel more affordable
• Appeals to Millennials and Gen Z who avoid traditional credit cards
• Encourages impulse buying by lowering the perceived cost of a purchase

But just because it’s popular doesn’t mean it’s right for every business.

The Hidden Costs of BNPL for Merchants

❌ 1. High Processing Fees

BNPL providers typically charge merchants 4% to 6% per transaction—nearly double the rate of traditional credit card processing. That’s a big hit to your margins, especially if your business already runs lean.

❌ 2. Increased Return and Dispute Risk

With more payment complexity comes more confusion—and that means more returns, chargebacks, and customer service headaches. If a customer returns a BNPL purchase, you may still be on the hook for fees or need to deal with a third party to resolve it.

❌ 3. Less Control Over the Checkout Experience

BNPL platforms introduce outside branding and messaging at the point of sale, which can dilute your own brand and confuse customers. You’re also trusting a third party with a key part of the customer journey.

❌ 4. Encouraging Customer Debt

BNPL is often marketed as “interest-free,” but for customers who miss payments, the late fees and penalties can add up fast. This can lead to customer frustration, buyer’s remorse, or even damage to your brand if they associate that negative experience with your business.

BNPL May Not Be a Fit for Every Business

While large online retailers may benefit from offering multiple payment options, small businesses should be cautious. BNPL is most useful in high-ticket retail (fashion, electronics, furniture)—and less applicable for service businesses, quick-service restaurants, or lower-ticket transactions.

Also, if you rely on predictable cash flow and low processing costs, the added expense and operational complexity may not be worth it.

What Beacon Payments Recommends

At Beacon Payments, we prioritize solutions that are:

• Transparent and cost-effective
• Built around helping merchants retain more of what they earn
• Focused on reliable, proven technology like POS systems, mobile terminals, and dual pricing programs that actually reduce your costs

We do not support or recommend BNPL solutions at this time, but we’re happy to talk with you about alternatives that help your business grow without the added risk.

Final Thoughts

Buy Now, Pay Later may be trendy, but it isn’t always practical—especially for smaller businesses. Before jumping on the bandwagon, carefully weigh the costs, risks, and operational burden.  Want to explore payment solutions that work for your business—not against it?
Contact Beacon Payments today for honest advice and proven tools that help you grow.