Buy now, pay later (BNPL) enjoys popularity among all age groups in Germany. In a survey commissioned by the Federal Financial Supervisory Authority (BaFin) of consumers ages 18 to 60, just under one-third reported using this payment method occasionally, while 10% reported using it monthly and 9% frequently.

In this article, you’ll learn what BNPL is, how it works, and how it differs from other payment methods. We’ll also explain how it can impact customers’ purchasing behavior, the financial aspects retailers need to be aware of, and how you can offer BNPL as a retailer.

Key takeaways

• BNPL allows customers to receive their purchases immediately and pay later.
  
• Payment can be made either as a lump sum or in installments that are subject to additional interest or fees.
  
• Surveys and studies indicate that BNPL shoppers tend to buy more and spend more than those using traditional payment methods.
  
• With BNPL, retailers typically receive their funds immediately from the payment service provider (PSP), which reduces default risk and stabilizes cash flow.
  
• BNPL reduces admin for retailers, since payment processing, credit checks, and dunning are all handled by the PSP.
  
• Stripe Payments makes it quick and easy for retailers to integrate BNPL, manage payments centrally, and process refunds efficiently.
  

What is buy now, pay later (BNPL)?

BNPL is a credit-based payment option used in brick-and-mortar retail and, above all, in online retail. Customers receive their items immediately but do not pay for them until later. They usually have a choice between making a single one-off payment or spreading the costs over a period of weeks, months, or even years. Depending on the model and provider, deferred lump-sum payments often do not incur any fees, while installments tend to come with interest or additional costs.

The benefit of BNPL for customers is that it gives them the flexibility to pay at a time that suits their particular financial situation. For retailers in Germany, the primary benefit of offering BNPL is fast settlement, provided payment is processed by a specialized provider that covers the payment up front.

How does BNPL work in Germany?

Customers select the BNPL payment option during checkout, choosing whether they want to make a one-off payment or spread the costs over multiple installments.

One-off payment (payment on invoice)

A one-off (usually interest-free) payment made at a set time after purchase is equivalent to a payment on invoice. The key difference in the context of BNPL is that there is usually a payment service provider (PSP) acting as an intermediary between the retailer and the customer. This payment provider takes care of payment processing, payout, and the risk of payment default. Retailers get their money from the PSP instantly; customers then have to settle their invoice within a set period, e.g., 14 or 30 days.

Installment payments (partial payments over time)

With payment in installments, the costs of the purchase are spread over a period of time. Customers generally pay these installments monthly. Typical repayment terms range from three to 48 months. Customers enter into a contract directly with the PSP, which typically charges interest or additional fees.

How does BNPL differ from card payments?

There are several differences between BNPL and traditional credit card payments or debit card payments.

Payment timing and flexibility

With BNPL, customers can decide whether they want to make a one-time payment after delivery or to pay in installments over several months. With card payments, depending on the card and billing model, payment is debited immediately or becomes due during the next billing cycle. BNPL, therefore, affords customers greater flexibility.

Risk and settlement for retailers

With BNPL, retailers receive their money from the PSP instantly, even if a customer defers payment. This eliminates the risk of payment default for retailers. With card payments, the payout depends on the credit card provider and can be affected by chargebacks, which happen when payments are disputed or flagged for fraudulent activity, for example. This makes card payments a riskier option for retailers compared to BNPL.

Cost structure

Card providers generally charge a fixed transaction fee for each payment transaction. With BNPL, fees can vary depending on the model selected. Since BNPL providers bear the risk of default, the fees for retailers tend to be higher than those for card payment fees.

BNPL in Germany: Impact on purchasing behavior

BNPL affects not only payment processing, but also customers’ purchasing behavior.

Products and spending

A survey of German consumers conducted in April 2025 on behalf of BaFin shows that BNPL is predominantly used for small to medium-sized purchases.

• 46% of consumers spend less than €100 per month on average.
  
• 26% spend between €101 and €200.
  
• 17% spend between €201 and €500.
  
• 5% spend more than €500.
  

However, BNPL is used to purchase a wide range of products, in particular:

• Clothing (55%)
  
• Electronics (43%)
  
• Household goods (26%)
  
• Furniture (20%)
  
• Beauty and care products (21%)
  
• Medical products (20%)
  
• Travel (19%)
  
• Groceries (17%)
  

Motivation for using BNPL

Customers’ motivation for using BNPL varies depending on the model.

• Payment on invoice
  Nearly one-third of those surveyed by BaFin stated that they use payment on invoice because it allows them to defer payment. 16% wanted to make a purchase even though they did not have sufficient funds at the time. For around half of BNPL users, convenience was the main reason for choosing payment on invoice. 40% wanted to try out a product before paying. One-third selected the payment option because it felt more secure.

• Installment payments
  39% of those who paid in installments stated that their primary motivation was convenience; 38% appreciated being able to spread the cost over several months, and 31% liked being able to delay payment. 29% of those surveyed used this option because they were unable to pay for their purchase in a single lump sum.

Impact for retailers

For retailers in Germany, BNPL can be a valuable addition to their payment options, with the potential for positive effects. An economic analysis published in 2024 showed that using BNPL can boost sales by around 20%, especially among customer groups with worse credit, and for products where retailers have a degree of market power.

At the same time, studies indicate that BNPL increases purchase volume. Customers who use BNPL spend, on average, 6.42% more than those who pay using traditional payment methods.

What are the financial implications of BNPL for retailers?

The use of BNPL has a direct impact on retailers’ cash flow. BNPL providers charge retailers fees for their services. These fees can vary significantly depending on the provider and the specific model; so German retailers should always read the terms and conditions in full before signing a contract. It’s also a good idea to factor in potential additional costs for installment payments or additional services.

Offsetting these costs is a significantly reduced administrative burden. Depending on the model, BNPL providers take care of a great deal of the process, including credit checks, dunning, and accounts receivable management. This means that retailers usually don’t have to worry about outstanding invoices. This simplifies internal processes and frees up staff resources. Retailers can also significantly reduce their costs for accounting, debt collection, refunds, and customer service, as many of the standard processes are automated through the service provider.

Another advantage is instant payout: retailers receive their funds directly from the PSP. This up-front payment stabilizes liquidity, makes financial planning easier, and can help bridge bottlenecks.

What are the risks of BNPL for retailers?

While there are many benefits of BNPL, it also comes with certain risks that retailers in Germany should take into account.

• Dependency on PSP: Since the entire process is managed by an external PSP, the retailer is heavily dependent on this provider’s stability, reliability, and quality of service. Issues or downtimes can have an impact on the sales process and payouts.
  
• Fees and contract terms: BNPL providers often charge higher fees for their services compared to traditional payment methods. Contract terms that are unclear or are subsequently amended can also have a negative impact on the profitability of individual transactions.
  
• Refunds and disputes: Although the risk of default typically lies with the PSP, refunds or customer complaints entail administrative effort and potential delays in processing.
  
• Reputational risk: Unclear contract terms, additional costs, or issues around installments can lead to unhappy customers and damage a retailer’s image.
  
• Regulatory requirements: In Germany, BNPL providers are subject to strict regulation by bodies such as BaFin. Retailers must ensure their contracts and processes comply with the regulations in order to avoid liability risks.
  

Regulatory requirements for BNPL

In Germany, BNPL is subject to a range of statutory regulations that retailers must observe. Complying with these regulations is key to avoiding liability risks and maintaining strong customer relationships.

Electronic ecommerce payments are subject to the regulations of the revised Payment Services Directive (PSD2), which requires measures such as strong customer authentication and additional security protocols in order to prevent fraud and make the payment process secure. When retailers engage the services of BNPL providers, they must ensure that their provider complies with the statutory regulations.

The same applies to the processing of personally identifiable information; this must comply with the requirements of the EU General Data Protection Regulation (GDPR) and the German Federal Data Protection Act (BDSG). Key among these requirements are the secure transmission and storage of sensitive data.

Retailers are also obligated under Section 312i and Section 312j of the BGB (German Civil Code) to provide their customers with comprehensive details regarding prices, costs, shipping, and return policies before a contract is entered into. This obligation applies regardless of whether a BNPL service provider is responsible for processing payments. In this instance as well, the statutory right of withdrawal (i.e., cooling-off period) is generally 14 days and must be clearly communicated by the retailer.

How Stripe can help you with BNPL

Stripe Payments offers a flexible solution that allows retailers in Germany to easily integrate buy now, pay later options into their online store. They can then manage different payment models, such as payment on invoice or installment payments, through a single payment flow—including payout, refunds, and reporting. Eligible retailers can activate BNPL offers instantly, without lengthy applications, onboarding, or additional risk assessments.

• Simple integration: With Stripe, retailers can integrate various BNPL providers in minutes, all via a single API. This reduces dev time and allows for fast rollout. Stripe can prioritize appropriate payment types according to region and context to improve the checkout flow.

• Improved conversion rate: Displaying BNPL options directly on product, cart, or checkout pages allows customers to see suitable payment methods right away, which increases their likelihood to purchase.

• Centralized management: All payments, no matter the payment method selected, are displayed in the Stripe Dashboard. This simplifies monitoring, financial planning, and the processing of refunds.

FAQs

Below, you’ll find answers to the most common questions about buy now, pay later in Germany.