If you’re an avid online shopper, you’ve probably come across the phrase “buy-now, pay-later,” (BNPL) at checkout. For many consumers, this is their opportunity to make affording larger purchases a lot more manageable.
According to a report by the Consumer Financial Protection Bureau (CFPB), between 2019 and 2021, the number of BNPL loans originated in the U.S. by the top five lenders grew by 970 percent. Consumers seem to favor the option to spread payments out over a few weeks or months—and unlike traditional credit cards, many BNPL platforms are interest and fee-free.
But there has to be a catch, right? Well, not BNPL platforms have the same requirements, rates, and fees. Before you agree to make a purchase using BNPL, you should be aware of how it works and how it could impact your finances.
To help make your decision a little easier, the Fortune RecommendsTM editorial team reviewed a few of the most popular BNPL platforms. We weighed annual percentage rates (APRs), late fees, loan terms, mobile app ratings, and more to help you decide if buying now, and paying later is worth it. (Read our full methodology here.)
Our top 5 picks*
*This section last updated March 24, 2023
The 5 best ‘buy-now, pay-later’ platforms of March 2023
Here’s our rundown of the top 5 BNPL apps and services, including the key figures you should know before you use one. (Note: eligibility requirements, fees, and other numbers in our list below are up to date as of March 24, 2023, and are subject to change.)
About: Zip was founded in Australia in 2013, and provides BNPL services to consumers, merchants, and businesses across the globe. The platform currently offers interest-free credit across a directory of more than 18,500 merchants.
Loan terms: 4 installments over 6 weeks
If your installment payment is late, you may incur an initial late fee of $7.
Customer support representatives can be reached via phone every day of the week between 8:00 a.m. and 10:00 p.m. EST, as well as via live chat Monday through Sunday from 7:00 a.m. to 11:00 p.m. EST, and via email.
Good for those who want to pay off their purchase sooner, rather than later. Zip took the top spot on our list for its interest-free model and for having one of the lowest late fees on our list. The app also boasts an average mobile app rating of 4.4 on Google Play and the App Store. Using Zip has zero impact on your credit score and you can use the service almost anywhere Visa is accepted. This platform did have the shortest repayment timeline out of all of the platforms we reviewed. When using this service, customers will split their purchase up into four installments over the course of six weeks. For customers who are looking to finance a larger purchase, this could put a strain on their budget.
About: Afterpay was founded in Australia in 2014 and currently serves millions of customers and businesses around the globe. The platform currently offers BNPL services to more than 15,000 merchants.
Loan terms: 6 months, 12 months, or in 4 interest-free payments
Afterpay charges an initial $10 late fee if a payment is not processed on or before the due date, and a further $7 if the payment remains unpaid 7 days after the due date. For each order below $40, a maximum of one $10 late fee may be applied per order. For each order of $40 or above, the total of the late fees that may be applied are capped at 25% of the original order value or $68, whichever is less.
Afterpay representatives are available to answer any questions you have via email or in-app chat live chat which is available 24/7, although response times may vary.
Good for those who want to shop on their phones. Afterpay took the second spot on our list for its interest-free payment model and for having a competitive mobile app rating.With this platform, you can shop your favorite retailers directly from the app, receive curated round-ups, and keep up with the latest deals. What’s more—you can earn rewards when you shop using Afterpay. The platform does charge late fees for missed payments, although it’s capped at $10 or 25% of the original order value.
About: Sezzle was first launched in 2016 and offers BNPL services to more than 40,000 merchants, offering both in-store and online payment options for customers hoping to boost their purchasing power.
Loan terms: 3 months–48 months
If you fail to make a scheduled payment, you may be charged a late fee of up to $15 should that payment be late by more than two days.
Good for those who want to build credit. Sezzle not only offers the longest repayment option on our list, but it also offers a unique perk that most BNPL platforms do not: the ability to have your payment history reported to the credit bureaus. When you upgrade from a standard Sezzle account to “Sezzle Up,” your payment history will be reported to all three major credit bureaus—Equifax, Experian, and TransUnion. At the end of each month, the platform will review the overall standing of your account, including your outstanding balance and payment status. That month-end standing is then reported to the credit bureaus. Sezzle has an average rating of 4.75 across both app stores and had one of the highest customer service scores on our list.
About: Klarna was founded in Stockholm, Sweden, in 2005 and now serves 150 million consumers across the globe, across more than 500,000 merchants in 45 countries.
Loan terms: 1–24 months
A late fee of up to $7 may be charged if any scheduled payment remains unpaid after 10 days—not to exceed 25% of your total purchase amount.
Klarna representatives can be reached 24/7 via phone or chat.
Good for those who want to finance a larger purchase. Klarna made our list for its 24/7 customer service options, wide range of repayment options, and its credit limit (or lack thereof). When you use Klarna, there is no predefined spending limit. Instead, a new automated approval decision will be made each time you use the service that will tell you what your credit limit is. Consumers who are managing their credit responsibly may see an increase in their purchasing power over time, which could make it easier to cover larger purchases. Klarna’s app, which has an average mobile app rating of 4.6, also offers a rewards club that will allow you to earn points on your purchases, a place to store loyalty cards from your favorite stores, price drop notifications, and more.
About: Paypal is a notable name in the mobile payment app space, and its services have expanded to include BNPL services across $325 million merchants worldwide.
Loan terms: 4 interest-free payments made bi-weekly or 6, 12, or 24 monthly payments
PayPal does not charge any late fees.
Paypal representatives can be contacted in-app via the message center or by calling the customer service line between 6:00 a.m. PT and 6:00 p.m. PT Monday through Sunday.
Good for those who want a greater selection of merchants to choose from. Paypal’s “Pay in 4” and “Pay Monthly” BNPL plans took the final spot on our list for having the greatest selection of merchants to choose from. In addition to its wide network of partnerships, Paypal offers flexible loan terms, zero late fees, and purchase protection feature which will reimburse you if the item you ordered doesn’t arrive or doesn’t match the original description. The BNPL option offers two plans, one for purchases between $30–$1,500 and a monthly financing plan for purchases between $199–$10,000. Users can enroll in autopay under both plans.
What to know about buy-now, pay-later platforms
Buy-now, pay-later platforms can make it easier to afford purchases that are just outside your budget by breaking down the lump sum cost into smaller, easier to manage installments. These installment loans may come with interest and fees that vary from platform to platform. Typically, merchants will partner with a buy-now, pay-later platform and offer this as a payment method at checkout.
Should you choose to go this route, you’ll be directed to that platform’s site where you’ll need to create an account and provide personal identifying information (PII) such as your Social Security number (SSN), date of birth, contact information, and more. In many cases, the platform will use this information to perform a soft credit check (which doesn’t impact your credit score) to determine whether or not to approve you for a line of credit and determine your credit limit, APR, and more.
How to choose a buy-now, pay-later service
If you’re considering using a buy-now, pay-later platform to finance a purchase or multiple, there are a few key factors you’ll want to consider:
- The merchant network: Depending on the purchase you plan to make, you’ll want to make sure that the buy-now, pay-later service you’re using works with the retailer you’re buying from. These platforms typically have a directory on their website that you can browse through to see which retailers they’re partnered with or the retailer may also list buy-now, pay-later as an option at checkout.
- Interest rate and fees: The interest rate you’re offered will depend on several factors unique to your personal finances, credit history, and more. However, many platforms will offer a range for the interest rate they may charge and how much you could incur in late fees if you miss a payment. Read the fine print to determine if the splurge is worth the potential fees you could owe down the line.
- Loan terms: The terms for your loan will vary widely across platforms. When you’re thinking about the purchase you want to finance, you should also be mindful of your desired repayment timeline. While some platforms break down your payments across several months, others offer maximum loan terms of just a few weeks, which may be harder to manage depending on your financial situation.
Frequently asked questions
Do buy-now, pay-later apps hurt your credit score?
Buy-now, pay-later apps don’t generally report payment information to the credit bureaus, although there are apps that do. However, this does not mean late payments won’t incur hefty fees or be sent to collections if you do not adhere to the terms of your loan. And, it also means that a positive payment history will not help you build credit over time, in most cases.
Can I get approved to us a buy-now, pay-later app if I have bad credit?
Approval will be determined by the lender you’re choosing. Some buy-now, pay-later platforms may extend you a line of credit even if you have a lower credit score, but this may come at the cost of a higher APR or a lower credit limit.
What are the disadvantages of buy-now, pay-later?
Some downsides of buy-now, pay-later services include late fees, the temptation to overspend, and potentially steep interest rates.
The Fortune RecommendsTM team compared 7 of the most popular buy-now, pay-later apps and services to help you find the best platform for your borrowing needs. To come up with our final list, we ranked the best apps and exchanges on the following categories and weighted each category as set forth in the percentages below:
- Maximum annual percentage rate (APR) (25%): Platforms that did not charge any interest or charged low interest rates scored higher than platforms with higher interest rates.
- Maximum late fee (20%): Many buy-now, pay-later platforms charge a fee for late or missed payments. We ranked platforms that had lower or no late fees at all higher on our list.
Number of merchants (20%): We rewarded platforms that offered financing options for a greater variety of merchants.
- 0–1,000: 1 point
- 1,001–5,000: 2 points
- 5,001–10,000: 3 points
- 10,000-15,000: 4 points
- 15,000+: 5 points
- Maximum loan term (20%): We favored platforms that offered longer loan terms, providing consumers with a longer repayment timeline.
- Mobile app rating (10%): We calculated the average mobile application rating for each platform using ratings from the App Store and Google Play and rewarded platforms that had a higher mobile app rating.
- Customer service options (5%): Top picks offer customers three ways to get in contact: chat support, by phone, or even email. Among the three options, we gave phone support the most weight.
We think that the best platforms offer financing for purchases from a large number of merchants, low or zero APRs, longer loan terms, a high mobile app rating, and various customer service options. The requirements, fees, and merchants partnered with these platforms may change and financing terms, limits, and APRs are dependent on your individual credit profile, income, and more.