Buy Now Pay Later charges merchants processing fees around 8% to 10%, compared with about 2% to 4% for typical card processors. Merchants incorporate these costs into shelf prices, so higher prices affect every customer at stores that accept BNPL. Shoppers may underestimate the impact by focusing on small installment amounts, even when the total cost is much larger. A pay-in-four plan can be interest-free to the shopper, but the provider still earns revenue through merchant fees. For example, a $400 purchase split into four payments can cost the retailer about $36 more than a standard card transaction, leading retailers to raise prices, reduce promotions, or eliminate seasonal sales.
"BNPL companies charge merchants 8% to 10% in processing fees, double or triple the 2% to 4% typical card processors charge. Merchants bake that cost into shelf prices, which means everyone shopping at a BNPL-accepting store pays more, whether they split the payment or not."
"Kamel calls the pattern “death by a thousand cuts”: shoppers tell themselves “it’s only $10, right?” while quietly stacking 90 payments that total $900. The stakes are simple, but if you treat a four-payment plan as free money, you will spend more, owe more, and lose the price signal that tells you whether you can actually afford the thing in your cart."
"If you buy a $400 pair of running shoes and split it into four $100 payments, the retailer pays roughly 9% to the BNPL provider, which steals about $36 from that transaction. Contrast that with a standard credit card swipe, where the processing fee is closer to 3%, or just $12. Because the store loses $24 more on the BNPL sale, they have to protect their margins."
Read at 24/7 Wall St.
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