Buy now, pay later (BNPL) has changed the way New Zealanders shop, and businesses are paying attention. Customers often appreciate flexible payment options at checkout, and for some, BNPL is the deciding factor between completing a purchase and walking away. While BNPL can increase sales and attract new customers, it can also reshape cash flow, impact margins, and require businesses to think strategically about integration and risk. Businesses that understand how to use BNPL effectively can turn it into a powerful growth driver instead of just another expense.

The gross merchandise value of BNPL in New Zealand is projected to increase from $1.22 billion USD in 2023 to $2.40 billion USD by 2029. Below, we’ll explain how BNPL fits into New Zealand’s payment environment, why customers are adopting it, its financial trade-offs for businesses, and how Stripe can help companies integrate BNPL as a payment option.

What’s in this article?

• What is BNPL?
  
• How does BNPL work in New Zealand’s payment environment?
  
• Why are some customers in New Zealand choosing BNPL over credit cards?
  
• What are the risks and challenges of BNPL for businesses?
  
• How does BNPL affect business finances?
  
• How does Stripe support BNPL options for businesses in New Zealand?
  

What is BNPL?

Buy now, pay later allows customers to buy something now and pay for it in smaller installments over time—often interest-free. For example, a purchase for 100 New Zealand dollars (NZD) might be split into 4 payments of $25 NZD.

Signing up for BNPL takes seconds: there’s usually no hard credit check or long forms, and approval can happen instantly. Smaller payments over time can also make purchases feel more manageable for customers, which can increase conversion rates and average order values for businesses. The value of the global BNPL payment market is expected to surpass $560 billion USD in 2025.

How BNPL differs from credit cards

BNPL isn’t like a credit card, although there are some similarities. Customers who use BNPL don’t pay interest if they pay on time, as with credit card purchases. The biggest difference is what happens when those payments are due. With credit cards, the whole purchase is added to a monthly statement. But BNPL purchases are automatically divided into installments.

When a customer uses BNPL, the BNPL provider pays the full purchase amount to the business up front (minus a processing fee) and then collects the installments from the customer. This means the business gets paid immediately without carrying the credit risk or managing repayments.

How does BNPL work in New Zealand’s payment environment?

BNPL is now a standard part of New Zealand’s payment environment. Although debit and credit cards still account for the majority of transactions, BNPL’s share is increasing. In 2023, it was used in nearly 12% of ecommerce payments. Many customers now expect to see BNPL options at checkout, and businesses across retail, hospitality, and travel offer them to meet demand.

How businesses integrate BNPL

Businesses in New Zealand can add BNPL by either integrating directly with a provider such as Afterpay, Klarna, or Zip—or by using a payments platform that supports BNPL. Once enabled, BNPL appears as a payment option alongside cards, digital wallets, etc. Customers can select it, log in or sign up, receive instant approval, and complete their purchases. The BNPL provider pays the business up front (minus a fee) and collects the installments from the customer. Many businesses offer multiple BNPL options to cater to customer preferences and improve conversion rates.

Why are some customers in New Zealand choosing BNPL over credit cards?

Buy now, pay later is increasing in popularity among New Zealanders. Economic conditions, spending habits, and the way people manage their money make BNPL a particularly appealing option. Here’s a closer look:

• Rising cost of living: The costs of living and housing are rising, which often leaves customers with less disposable income. Unlike a credit card, which can feel like an open-ended liability, BNPL offers a structured way to split payments without paying interest—allowing customers to make big-ticket purchases without using savings or adding debt. BNPL’s fixed installment structure also makes it easier to plan around paydays and keep cash available for essentials.

• Falling credit card usage: Electronic credit card use is dropping in New Zealand year over year. BNPL fills that gap by giving people a way to access short-term credit without going through banks. And a 2021 government survey found that 75% of BNPL users use it as an alternative to credit cards. This might signal a long-term shift in the future.

• Online shopping habits: BNPL is built for ecommerce. As digital payment adoption and smartphone usage are high among New Zealanders, BNPL fits their shopping habits. Major BNPL providers partner with local retailers, making it easier for customers to see BNPL as a default payment option—whether they’re buying clothing, technology, or flights.

What are the risks and challenges of BNPL for businesses?

BNPL can drive sales and increase conversion rates, but it can also reshape a business’s finances and operations. Before integrating BNPL, businesses in New Zealand should weigh the trade-offs.

Higher fees, lower margins

BNPL providers charge businesses substantially more than card providers. If too many customers switch from lower-cost payment methods (e.g., debit cards) to BNPL, margins shrink. Businesses need to track BNPL adoption carefully: an increased sales volume can offset the higher fees, but only if BNPL is bringing in new customers or larger purchases rather than just shifting existing ones to a more costly payment method.

More frequent, complicated returns

BNPL can fuel impulse buying. Customers might feel like they’re spending less because they’re paying only a fraction up front, which can lead to second thoughts and higher return rates. While the business gets paid up front, BNPL refunds are more complicated than standard credit card refunds. They often require returning the full amount to the BNPL provider, which then updates the customer’s repayment schedule. If returns peak, businesses could see increased logistics costs, restocking challenges, and administrative work.

Companies should monitor return rates on BNPL purchases compared to other payment methods. A high return rate could erode the revenue benefits of BNPL-driven sales.

Dependence on third-party providers

Offering BNPL means relying on an external provider for a core part of the payment process.
Risks can include the following:

• Negative customer experience: BNPL is part of the customer experience. If a BNPL provider has a confusing sign-up process, technical issues, or harsh late fees, customers might associate their frustration with the business instead.

• Shifting terms: BNPL providers can increase fees, change approval criteria, or adjust settlement timelines.

• Industry consolidation: The BNPL industry can change quickly. For instance, in 2024, Klarna bought Laybuy, a New Zealand provider. Businesses that depend on one BNPL provider could be vulnerable to sudden shifts.

Unpredictable payments

Unlike card payments, BNPL settlements don’t always follow a predictable schedule.
Some BNPL providers pay the business the next business day, while others have longer settlement cycles. Businesses should adjust their financial processes to account for variable BNPL settlement timing and refund structures.

Ethical considerations

Some customers overextend themselves by using multiple BNPL services simultaneously. While that risk falls on the customer, businesses should be mindful of the approach around offering BNPL. A balanced approach is key: BNPL should be positioned as an option, not the default or only way to pay.

How does BNPL affect business finances?

BNPL can reshape a business’s financial structure. It can speed up cash flow and grow revenue, but it also comes with cost considerations that businesses need to manage. Businesses should regularly assess BNPL’s effect on margins and profitability, negotiate lower BNPL fees when transaction volumes increase, and ensure BNPL is driving larger purchases and attracting new customers rather than simply providing a higher-cost alternative.

Here’s how BNPL impacts business finances.

Cash flow

BNPL can have a positive impact on cash flow. Businesses receive the full payment up front (minus fees), while the BNPL provider handles customer repayments. This means businesses don’t have to wait for installment payments to trickle in; they get the funds immediately, as with a credit card transaction. BNPL can also accelerate sales. A customer who might have delayed a $500 NZD purchase could buy immediately if they can split it into 4 payments of $125 NZD.

That said, high BNPL fees reduce the net cash received per sale. Different providers also have different payout schedules. Some settle payments daily, while others take longer.

Revenue growth

Businesses that offer BNPL often see higher checkout conversion rates, larger order values, or more first-time customers—especially those who don’t use credit cards. BNPL removes the up-front cost barrier, encouraging more customers to buy. Many BNPL providers also promote participating businesses in their apps or online marketplaces, which can bring in new customers who specifically look for BNPL-friendly stores.

Profit

BNPL fees are higher than standard credit card processing fees. Businesses need to evaluate whether the increase in order value offsets the cost of BNPL fees and whether BNPL-driven sales are just shifting existing customers to a more costly payment method. If BNPL increases sales volume, total profit might still rise. But if too many customers switch from lower-cost payment methods to BNPL, that could reduce overall margins. Businesses should track BNPL adoption rates and their impact on profit margins, customer lifetime value, and the balance between higher sales and transaction costs.

Liquidity

A surge in BNPL-driven sales might require increased inventory, staffing, or supplier payments. Businesses should ensure their cash flow can keep pace with rising operating costs. Settlement timing varies between BNPL providers, but using a payments platform that consolidates BNPL payouts can help balance out fluctuations.

How does Stripe support BNPL options for businesses in New Zealand?

Businesses that want to integrate BNPL options can use Stripe to gain access to multiple BNPL providers with just a few clicks. Here’s how Stripe can enhance the BNPL experience for businesses and their customers.

Multiple BNPL options through one integration

Stripe supports major BNPL providers in New Zealand, including Afterpay and Klarna. Businesses can enable BNPL with a single integration and activate BNPL options directly from the Stripe Dashboard, which makes setup as simple as enabling a new payment method.

Fast, easy setup

Businesses that use Stripe don’t need to go through a separate underwriting process to accept BNPL. If eligible, they can start accepting BNPL payments in minutes. Stripe handles the redirect to BNPL providers, authorization, and payment confirmation. Platforms and marketplaces that use Stripe Connect can extend BNPL to individual sellers without additional setup on their end.

Unified reporting and payouts

Stripe consolidates all transactions—including BNPL, credit cards, and digital wallets—into a single reporting system. Businesses don’t have to reconcile separate BNPL deposits; Stripe manages the process, so that BNPL funds are included in the business’s regular Stripe payouts. Accounting teams benefit from detailed reporting that itemizes BNPL sales and fees.

Dynamic checkout experience

Stripe dynamically presents BNPL options to the customers who are most likely to use them, which can increase conversion rates without cluttering the checkout page. If a customer is shopping on a mobile device or purchasing a high-ticket item, Stripe’s AI models can prioritize BNPL as a recommended payment method. Businesses can also choose to display BNPL messaging earlier in the shopping journey (e.g., on product or cart pages) to increase adoption.

Risk management and compliance

Stripe maintains compliance with local regulations and payment network rules, so businesses automatically inherit best practices for data security and consumer protection.

Predictable settlement timing

Stripe processes BNPL transactions like any other payment, which means businesses receive up-front payouts instead of waiting for customer installments. BNPL funds are settled into the Stripe balance, and fees are automatically deducted. Payout schedules remain consistent, which helps businesses maintain predictable cash flow without worrying about BNPL settlement delays.

Global accessibility

Stripe handles currency conversion and local settlements for BNPL transactions. If a business sells to international customers using BNPL, Stripe manages exchange rates so that it can receive payouts in NZD. Stripe also provides guides and other resources on BNPL in each region to help businesses increase adoption.