# What is BNPL – Buy Now Pay Later?

What is BNPL – Buy Now Pay Later? Klarna, PayPlus, Afterpay — interest-free installment payments. Raises AOV by 20-30% but carries a 2-6% fee.

## How it works in practice

BNPL works when the customer is deterred by a large amount. $150 as 4 x $37.50 becomes a purchase that wouldn't have happened otherwise.

## Related metrics

- AOV — increases AOV
- Conversion Rate — increases CR on items above $80
- Gross Margin — the BNPL fee reduces it
- Chargeback — BNPL shifts fraud risk to the provider

## Common misconception

'BNPL suits every store.' On products under $50, it makes no difference. It's effective above $80.

## How to fix it

Not increasing conversions? (1) is it visible next to the price on the product page? (2) does the customer recognize the provider (Klarna isn't as well-known in Israel as PayPlus)?

## Real-world example

A home goods store: AOV of $115 plus Klarna's '4 x $29' raised conversions by 22% on items over $95. Margin dropped 4% but volume rose 34%.

## Where to start

Use BNPL if AOV exceeds $80 and gross margin exceeds 35%.

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Category: Payments · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/bnpl-buy-now-pay-later