More Revenue with Buy Now, Pay Later – What Merchants Need to Know

The purchase in an online shop is almost complete—yet at the last moment, the customer changes their mind. For merchants, this is a familiar and frustrating scenario. This is exactly where the targeted use of Buy Now, Pay Later (BNPL) can make a difference—both in online stores and brick-and-mortar retail. When used correctly, this payment method can help reduce cart abandonment and increase sales.

Studies show that around 70% of all online shopping carts never convert into a purchase. Globally, this leaves goods worth several trillion dollars sitting in digital carts every year. Some estimates even suggest that companies lose around $18 billion in actual revenue annually as a result.

An Old Classic with a New Name: Invoice Payments Make a Comeback

A common reason for abandoned purchases is the absence of a preferred payment method. What matters less is the number of options offered, and more how well they match the target audience. Especially for higher-priced products, paying by invoice plays a key role because it builds trust and offers financial flexibility.

Invoice payment is by no means a new invention. This model has existed for over 70 years—today, it is experiencing a revival under the label “Buy Now, Pay Later.” The principle is simple: customers buy now and pay later.

After PayPal, invoice payment remains one of the most popular payment methods in Germany. According to the “Online Payment 2025” study by the EHI Retail Institute, it recently accounted for 25.8% of online revenue. Merchants use it strategically because it builds trust and can reduce drop-offs during checkout.

Installment payments, by contrast, still play a smaller role, currently accounting for around 4% of online retail revenue. At the same time, their importance is growing - especially for higher-priced items that customers increasingly prefer to finance in multiple installments.

Looking ahead, strong growth is expected for these models. Forecasts suggest that the German market for such payment solutions could grow from around $0.7 billion in 2025 to approximately $5.65 billion by 2035. Key drivers include the ongoing boom in e-commerce and rising demand for flexible payment options—particularly among younger consumers.

BNPL Can Increase Basket Size by an Average of 10%

But why is BNPL so attractive to consumers? A survey by Unzer shows that over 40% value invoice payments because they can inspect the goods first. Around a third cite greater payment flexibility as the main reason. Financing larger purchases follows at about 14%. Factors such as inflation or discounts play a much smaller role.

For merchants, this leads to a clear takeaway: especially for higher-priced products—such as furniture, kitchens, electronics, fashion, or travel—it pays to include BNPL in the payment mix. Studies, including those by IFH Köln, show that the average basket value can increase by around 10%. At the same time, purchase probability rises from 17% to 26%.

For customers, the buying process remains simple: checkout is completed in just a few clicks, while payment is deferred or split into installments. Merchants, however, usually receive the full amount immediately via the payment service provider.

Three Models for Implementing BNPL

Merchants have three options for offering invoice or installment payments. They can manage the entire process themselves (in-house), work with an external provider under that provider’s brand (branded), or use a service in the background while maintaining their own brand presence toward customers (white label). Each option differs בעיקר in terms of effort, control over customer data, and financial risk.

With the in-house model, the company handles the entire process itself—from credit checks to payment processing. This allows for maximum control over data and the customer journey, but requires significant investment and also entails financial risk.

In the branded model, the technology of an external partner is used, usually under the partner’s brand. This significantly reduces effort and risk, but also creates greater dependency on the provider. In addition, some third-party providers use customer data for their own marketing activities.

The white-label model combines elements of both approaches. Payment processing is handled in the background by a service provider, while the entire brand experience remains with the merchant. This strengthens customer trust and can reduce cart abandonment—which is why large platforms are increasingly adopting this model.

One example of such a white-label service is offered by Unzer. Merchants can fully integrate invoice and installment payments into their own branded experience and customize the design. At the same time, they benefit from more than ten years of experience in this field, as well as extensive data for risk assessment. Careful credit checks also help prevent over-indebtedness and fraud.

How BNPL Works in Physical Retail

BNPL is no longer limited to online commerce. In physical stores, customers increasingly expect the same flexible payment options as in e-commerce. The experience should be consistent—whether online, mobile, or in-store.

The challenge is to balance data protection, privacy, and ease of use, while keeping the payment process as simple as possible.

At Unzer, for example, merchants enter the purchase amount along with the customer’s mobile number or email address into the terminal. Customers then provide a few additional details on their smartphone. The credit check is carried out in real time.

Customers can then choose from various payment options and take the product with them immediately. Merchants receive the full sales amount right away, while the payment provider handles the rest of the process.

Conclusion

The right payment mix is a critical success factor in e-commerce. Buy Now, Pay Later is among the most in-demand options. Whether implemented in-house, via a branded solution, or as a white-label model, the key is choosing the approach that fits your business model. When used effectively, BNPL can reduce cart abandonment, increase basket sizes, and ultimately drive higher revenue over the long term.

About Christoph Heinzle

Christoph Heinzle is Managing Director of Unzer Austria GmbH, based in Vienna. He oversees the company’s operations in Austria for the Unzer Group, a European payments provider that enables merchants to process transactions across all channels, devices, and markets—whether online, mobile, or at the point of sale. As Vice President E-Commerce, he also leads solutions tailored specifically to e-commerce clients, for whom invoice and installment payment options (BNPL) are particularly relevant.