Recently, Overstock.com Inc. shoppers have used buy now, pay later (BNPL) for orders as low as $10, says CEO Jonathan Johnson.    

But Johnson isn’t worried, even as some critics say using BNPL for smaller purchases is a sign of debt risk. Johnson is excited to see BNPL become a bigger part of Overstock’s business. On the case of an economic downturn, BNPL makes the products it sells more accessible to nontraditional customers.   

More retailers are adding buy-now-pay-later services every year, and as of April 2023, 54% of Digital Commerce 360’s ranking of the Top 1000 online retailers offer some version of this payment type. That’s up from 45.8% of Top 1000 retailers in 2022 and 28.2% in 2020. And the biggest retailers are joining in, with Amazon.com Inc. adding BNPL through vendor Affirm Inc. in 2021.  Plus, Apple Inc. just added its own version of BNPL, Apple Pay Later, in March 2023.    

BNPL is a short-term financing option offered on the online checkout page. It allows shoppers to spread out the payment for a purchase over a specified period. Consumers apply for the financing option with whichever vendor the retailer uses during checkout. Then, customers pay the smaller payments over the course of several months and without an interest fee. Instead, retailers pay the BNPL vendor a service fee per transaction, which ranges from 2% to 8%. Many of the large vendors pay the merchant the full order amount right away. Then, they don’t have to wait for the customer to pay each installment to receive the payment.

BNPL loans can be more attractive to consumers than traditional credit cards because they generally do not charge interest over the period of the loan. Consumers can qualify for them without a hard credit check that could show up on a credit report. Shoppers can pay for the installments using a credit card, debit card or bank account.