How to Develop a Buy Now, Pay Later App: Features, Cost, and Benefits

Ever been there? You’re running an online store and you see customers abandoning their carts at the checkout process.

It’s frustrating, right?

You have done all the hard work attracting them, they’ve picked out their items, they’re this close to buying, and then…poof! They’re gone.

A big reason for this is the upfront cost. When items are expensive, customers might hesitate to pay the full price all at once. This affects your sales and can hurt your revenue.

But what if you could make it easier for customers to buy what they want by letting them pay over time?

That is where “Buy Now, Pay Later” apps comes in. It’s a simple & effective way to improve your sales. With BNPL customers can purchase products at present and pay in smaller, more manageable payments later. This change can encourage more customers to complete their purchases.

If you’re thinking about building your own BNPL app, it could be a great business opportunity. You’d have control over how payments are set up, create plans that fit your business, and even earn extra money through fees.

In this blog post, we’ll explain what goes into creating the BNPL app, the essential and bonus features, the expenses, and the pros for all parties. Let’s dive in!

What is Buy Now Pay Later?

Buy Now Pay Later is a payment solution that makes it easy for the buyers to purchase items immediately and pay the amount afterwards in multiple instalments.

The concept of BNPL is rooted in credit systems that existed in the past such as Udhar Khata in India where customers could purchase things on credit. Currently, BNPL is offered online and in physical stores with companies like Affirm, Klarna, Afterpay, etc. providing such services to consumers.

Why Are BNPL Apps Becoming Popular?

The rise of BNPL apps is driven by several reasons for both consumers and merchants:

For Consumers

Convenience: It means that you can purchase something today without worrying about the ability to pay back immediately which is very important for people with poor cash flow.

Low or No Interest: Some BNPL services allow consumers to make payments without interest if they are done within the required time, this is cheaper than using credit cards with the high-interest rates.

Growth of Online Shopping: Especially after the pandemic crisis, the percentage of buyers using BNPL, increased to 51%, using it to make purchases.

Better Financial Control: BNPL assists the customer to plan and make proper payments at his or her convenient time to avoid getting deeper into debts.

For Merchants

Higher Sales: Retailers that provide BNPL usually record higher sales since consumers purchase more goods and services when they can pay later.

Increased Conversions: The integration of BNPL can lead to a decrease in cart abandonment level and the increase of sales by 20-30%.

New Customers: BNPL attracts all sorts of consumers and youths who would not have conventional credit access.

Why Are BNPL Apps Trending?

There are several reasons why BNPL (Buy Now, Pay Later) apps are on the rise: For the customers, BNPL is appealing not only to millennials but also to Gen Z, Gen X, and even 40% of baby boomers in 2024 while they are trying to balance their spending due to inflation and increasing concerns about their financial stability.

Technologies like digital wallets contribute to the rise of BNPL. Buy now, pay later services are advantageous to the merchants as they increase sales and drive more traffic to their online shopping websites.

As per the research, the global BNPL sector which was valued at $37.19 billion in 2024 is expected to rise to $167.58 billion by 2032 with an annual growth rate of 20.7%. BNPL is used often with 80% of the customers using it at least once within a period of 6 months.

Key Features Of A Buy Now, Pay Later (BNPL) App

Buy Now, Pay Later (BNPL) apps have become a popular way for people to shop and pay in instalments instead of upfront. These apps include features that make shopping easier, safer, and more flexible. Here are the key features explained in simple terms:

1. Easy Sign-Up and Account Management

Quick Sign-Up: Users can create an account easily with simple registration forms.

Profile Management: Users can update their details, add payment methods, and track their purchases and payments in one place.

Secure Verification: The app ensures users’ identities are verified with proper checks to keep things safe and legal.

2. Fast Approval

Quick Checks: The app does a soft credit check to approve users quickly without affecting their credit score.

Instant Decisions: Users get notified right away if their BNPL request is approved.

3. Flexible Payment Options

Instalment Plans: Users can pick a repayment plan, like splitting payments into four parts or paying monthly.

Interest-Free Options: Some plans let users pay without extra charges if they stick to the schedule.

Multi-Currency Support: The app can handle payments in different currencies for international users.

4. Smooth Shopping Experience

Online Store Integration: BNPL is available right at checkout in online stores.

In-Store Payments: Users can generate a virtual card or QR code to pay in physical stores.

5. Flexible Loan Terms

Custom Loan Options: Merchants can adjust repayment periods and set rules for late or early payments.

Automated Loan Requests: The app automatically processes loan requests when users select BNPL at checkout.

6. Purchase Tracking and Alerts

Track Purchases: Users can see their purchases and payment schedules in the app.

Payment Reminders: The app sends alerts about upcoming payments or new offers.

7. Strong Security

Data Protection: Advanced systems keep user data and payments safe.

Fraud Detection: The app uses smart technology to catch and stop fraud.

8. Customer Support

Help in the App: Users can get assistance for any issues directly within the app.

Support Options: FAQs and multiple ways to contact customer service make getting help easy.

9. Budgeting and Spending Tools

Spending Limits: The app sets spending limits to help users avoid overspending.

Budgeting Tools: Features that help users plan repayments and manage their finances better.

10. Rewards and Benefits

Loyalty Rewards: Users may earn rewards for timely payments or frequent use.

Referral Bonuses: Users can get rewards for inviting friends to use the app.

What is The Cost To Develop A Buy Now, Pay Later (BNPL) App

Developing a “Buy Now, Pay Later” app involves varying costs based on complexity and features. This table outlines estimated budgets for basic, medium, and advanced apps, giving you a clear idea of the financial investment required.

Detailed Cost Breakdown by Features

Breaking down the custom app development costs by stages and features helps you understand how the budget is allocated. The table below highlights the estimated costs for each key development area.

Factors Affecting the Cost of BNPL App Development

Features

• Costs vary based on complexity.
• Example: Basic features like payment tracking vs. advanced features like AI-driven credit checks.

Development Platform

Platform selection affects costs:

• iOS: $12,000 – $33,000
• Android: $11,000 – $29,000
• Cross-platform: $13,000 – $33,750

Team Location

Developer hourly rates differ by region:

North America: $120 – $250/hour

India: $15 – $40/hour

Technology Stack

• Specialized programming languages and frameworks may increase costs.
• Cost depends on the stack’s complexity.

Compliance and Security

• Ensuring adherence to PCI-DSS standards and implementing secure payment systems adds extra costs.

5 Best Buy Now Pay Later Apps In The Market

Buy Now Pay Later (BNPL) apps are super popular these days, making shopping easier with flexible payment options. Here are five of the best BNPL apps out there right now:

1. Klarna

What It Is: Klarna, born in Sweden, is one of the biggest BNPL apps in the world.

How It Works: You can pay in four interest-free instalments, delay payment by 30 days, or go for monthly financing plans of up to 36 months.

Klarna works with over 450,000 retailers and has 147 million shoppers using it worldwide.

2. Afterpay

What It Is: This Australian app lets you split your purchases into four equal payments every two weeks.

How It Works: It’s interest-free, but there’s a late fee if you miss a payment. You can even use it for in-store purchases with a virtual card.

Afterpay is a hit with 19 million users and partners with 122,000 brands.

3. Affirm

What It Is: A popular U.S.-based BNPL app for financing purchases with flexible repayment options.

How It Works: Choose between “Pay in 4” for short-term payments or longer plans that go up to 48 months. Plus, it doesn’t affect your credit score.

Affirm teams up with big names like Expedia and Best Buy.

4. PayPal Pay

What It Is: Part of the PayPal family, this service lets you split payments between $30 and $1,500 into four instalments.

How It Works: Payments are interest-free, spread over six weeks, and come with PayPal’s purchase protection.

With millions of merchants accepting PayPal, it’s easy to use almost anywhere.

5. Sezzle

What It Is: A straightforward app that splits purchases into four payments over six weeks.

How It Works: You can also pick monthly plans for up to four years. It runs soft credit checks, so it’s beginner-friendly.

Sezzle works with 47,000 merchants across North America.

Steps To Develop A Buy Now, Pay Later App

Building a Buy Now, Pay Later (BNPL) app can seem like a big task, but breaking it down into steps makes it easier. Here’s a simple guide to help you get started:

1. Market Research and Competitive Analysis

The first thing you need to do is figure out what people want and what’s already out there. This means looking at other BNPL apps and understanding what’s working and what’s not. You also need to know who your target users are and what they like. This will help you find a way to make your app stand out from the competition.

2. Define the Business Model and Value Proposition

Next, you’ll need to decide how your app will make money. Will it be through transaction fees, interest on payments, or something else? You should also think about what makes your app special. Maybe it’s offering flexible payment options or rewards for users. This is your app’s value, and it’s what will keep people coming back.

3. Design User Interface and User Experience (UI/UX)

Your app should be super easy to use. Make sure the design is simple and user-friendly. Test it with real users to see how they interact with the app, and use their feedback to improve it. You should also think about making your app accessible to everyone, including people with disabilities.

4. Develop Core Features and Integrations

Now, it’s time to build the essential features. You’ll need a way for users to register and manage their profiles securely. Set up payment gateways so users can make purchases easily, and add a credit scoring system to keep everything safe and fair. Lastly, make sure your app can work with popular e-commerce platforms so users can easily shop using BNPL.

5. Testing for Quality Assurance and Security

Before you launch, make sure everything works smoothly. Test the app for bugs and performance issues. Check that it follows the rules for financial transactions and keeps user data secure. Make sure things like payments are protected with encryption and security features like fingerprint or face recognition.

6. Deployment

Once everything’s tested and ready, launch your app on iOS, Android, or the web. After the launch, keep an eye on how users are interacting with the app, and gather feedback so you can make improvements.

7. Post-launch Support and Continuous Improvement

After the app is live, you’ll need to keep it updated. Listen to what users have to say and make changes based on their feedback. Also, continue to market your app to bring in new users and keep the ones you already have happy.

Additional Considerations

Finally, make sure you’re following any local laws and regulations around BNPL services. You might need to get licenses or team up with financial institutions.

You’ll also need to budget for things like development, marketing, and maintenance. And, don’t forget about security – make sure your app is safe for users and protects their financial info.

Benefits Of Developing A Buy Now, Pay Later (BNPL) App

For Consumers

1. Flexible Amount – BNPL apps enable consumers to pay a portion of the price and make more manageable and reasonable instalments for a product instead of the whole amount.

2. Interest-Free Periods – Most of the BNPL apps offer interest free payment service where consumer can pay without any extra charges if it is on time.

3. Improved Cash Flow – BNPL makes it easier for consumers to purchase items that they normally would not be able to afford.

For Merchants

1. Higher Conversion – Offering BNPL can lead to better conversion rates because more people will complete their purchase, since they can pay in instalments.

2. Large Basket Size – The need to purchase more items within a single payment duration causes customer to buy more.

3. Increased Sales – enforcing flexible payment choices can enhance customer retention because shoppers revisit for the ease of using BNPL.

For Developers/Entrepreneurs

1. Increasing Market – The BNPL market industry is big and expanding fast, presenting a good business opportunity for developers and businessmen.

2. Customers’ Engagement – A BNPL app that has been designed with the right features can help in retaining customers and getting them to continually make purchases.

How Buy Now, Pay Later Apps Make Money

Business and revenue generation strategies concern the BNPL applications that provide a versatile payment plan to customers. Here are some common models:

1. Merchant Fees

Some of the BNPL apps set a commission for the merchants that want to list their services on the application. It is either a ratio of the deal or a fixed amount of money is charged as this fee. The retailers equally benefit from higher conversion rates and higher average order values that BNPL options provide.

2. Interest & Late Payment Fees

Some of the BNPL apps out there offer their services at an extra cost to consumers such as interest and penalty fees for failing to meet the instalment payments. This can be a great way to bring in the much-needed revenues for the specific application. However, the interest rates are fairly lower than the credit cards, thus the consumers who cannot afford to pay the full amount of a product, can choose BNPL option.

3. Consumers Fees for Premium Plans

Some of the BNPL apps have an upgrade feature that consumers can pay a subscription fee for other perks such as longer payment duration, higher credit limits or lower interest charges. This model can be used for establishing the flow of regular transactions that generate expected monthly/recurring revenues.

4. Data Monetization

BNPL platforms can collect valuable consumer data, including spending habits and creditworthiness. They can monetize this data by selling insights to retailers, financial institutions, or marketers. However, consumer privacy and data protection regulations must be considered when implementing this model.

5. Partnerships with Financial Institutions

BNPL apps can partner with financial institutions to offer additional services like credit cards or loans. These partnerships may involve revenue-sharing agreements or commissions for successful customer referrals.

6. Advertising and Sponsored Content

BNPL apps can include advertising opportunities within their platform, such as promoting specific merchants or offering sponsored content. Retailers may pay for placement to attract more consumers or boost sales.

7. Transaction Fees from Consumers

Some BNPL apps charge consumers a small transaction fee each time they use the service, especially for smaller or high-risk transactions. This fee can be a fixed amount or a percentage of the transaction.

Conclusion

Building a Buy Now, Pay Later (BNPL) app is a great way to tap into the growing demand for flexible payment options. By knowing what features, costs, and benefits come with making a BNPL app, you can create a platform that works for both shoppers and merchants.

Whether you go for a simple design or pack it with interesting features like AI credit checks and top-notch security, the key to success is making sure your app is easy, secure, and fun to use. With the right plan and a bit of effort, your BNPL app can stand out and make a big impact in the competitive market!