How do BNPL companies make money?
Mostly through merchant fees taken on each transaction. Some providers also earn interest on longer financing plans, late fees, card interchange when the shopper pays with a BNPL card, and advertising or affiliate revenue from their shopping apps.
In detail
Mostly through merchant fees taken on each transaction. The merchant pays the BNPL provider a percentage of the order, usually higher than a card fee, in exchange for being paid upfront and for the conversion BNPL can bring.
Other revenue sources
- Interest on longer financing plans, where the shopper pays over several months.
- Late fees, in markets and plans where they are allowed.
- Card interchange, when the shopper pays with a BNPL-branded card.
- Advertising and affiliate revenue from shopping apps that send traffic to merchants.
The mix varies by provider and by country. Regulation also shapes it: rules on consumer credit can limit late fees, require affordability checks or cap costs, which pushes providers to rely more on merchant fees.
What it means for payment operators
For an operator, the merchant fee is the cost that matters. It sits on top of the platform's own pricing, so merchants weigh it against the sales BNPL may bring. Offering BNPL as one method among others, and letting each merchant decide whether to enable it, keeps the choice where it belongs. Reporting that shows BNPL volumes and costs next to cards helps your merchants judge whether a provider earns its fee.