Why You Should Offer Financing as an E-Commerce Payment Method

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E-commerce financing is known by many names: POS financing, POS lending, pay over time financing, alternative financing, and more. Regardless of what you call it, this consumer credit option is offered as an e-commerce payment method during checkout.

By offering financing on your online store, you’re removing a financial barrier that might keep customers from purchasing everything they want from your business (or from completing their purchase at all). Keep reading to find out if offering e-commerce financing is right for your online business.

How Does Financing Work for Sellers?

Setting up financing on your e-commerce site is a relatively simple process that can pay off handsomely in the long run. Most financing partners have pre-built integrations with major e-commerce platforms like Shopify, which makes configuring your site a breeze. In some cases, you may need to hire a developer for more complex integrations.

Once your site is properly configured, you’ll have the opportunity to set up messaging throughout your site on product pages and in the cart. This messaging dynamically displays the customer’s potential monthly payment and the terms they would receive if they finance their purchase.

At checkout, customers will see the financing option displayed alongside other payment methods (like credit card, PayPal, Amazon Pay, and more). When financing is selected, the customer can instantly apply, be approved, accept terms from your third-party lender, and complete checkout. The seller will then be paid directly by the financing company and the customer’s ongoing relationship is with the lender so there’s no risk of non-payment to your business.

Why Offer Financing on Your E-commerce Site?

Not only is financing a relatively easy incentive to offer on your site, it can also have far-reaching impacts on your company’s bottom line. These are a few of the most impactful reasons you should be offering financing on your online store:

  • Increased average order values
    It has been shown in a BigCommerce study that average order value (or AOV) increases on average 15% among businesses that offer financing. The knowledge that they’ll be able to pay off the purchase over time allows customers the freedom to fill up their cart with less regard for their budget. In some cases, customers may receive longer payment terms on larger orders as an added incentive.
  • Get paid immediately
    Timely payments are critical to your bottom line, and third-party financing allows you to accommodate your customers’ financial needs while still ensuring you get paid. Because these lenders work directly with the customer, the seller is paid immediately, and the debt is owed to the financing company.
  • Reduce abandoned carts
    There are a variety of reasons a customer might abandon their cart, ranging from shipping rates, unexpected fees, lack of discount codes, and more. One of the most common objections, however, is seeing the cart’s total and deciding not to go through with the purchase. Enter e-commerce financing. Now, customers don’t have to let go of that lump sum all at once. They can spread their purchase price out over time in many cases with little or no interest, making for a much easier purchase decision.
  • Remove the most significant barrier to purchase
    Based on a study conducted by BigCommerce, 30% of shoppers using consumer credit said they wouldn’t have made the purchase at all if it weren’t for the financing offered. By offering financing to your customers, you’re easing or fully eliminating the sticker shock and financial anxiety caused by a high purchase price. This is especially helpful if you’re selling big ticket or luxury items that require a larger investment.

Major Players in E-commerce Financing

Ready to start offering financing to your customers? Before you can jump in, you’ll need to select the right lending partner. These are just a few of the available options, but these companies are some of the most popular lenders for online sellers.


Financing solutions from Affirm range from Pay in 4 installments (every 2 weeks) to longer-term monthly financing to fit every need. Customers may be approved for anywhere from 0-36% APR depending on their purchase and credit eligibility. 


Klarna offers a full suite of buy now, pay later options, like Pay in 4, Pay in 30 days, and Financing to give your customers ultimate flexibility. In addition, Klarna’s app is designed to drive new customers to your site and keep the sales rolling in.


With AfterPay, customers can get what they need and want, online and in-stores, and pay over 6 weeks with no surprises and no fees when paid on time. Through AfterPay’s app, retailers have the opportunity to reach new customers who are already signed up with the AfterPay platform.

PayPal Credit

Online shoppers are incredibly familiar with PayPal and likely already have a standard account through which they can become eligible for credit. PayPal Credit’s digital, reusable credit line can be used anywhere PayPal is accepted and provides customers with 6 months special financing on purchases of $99.00+.


Available exclusively to Shopify sellers, ShopPay is a proprietary payment method that allows customers to pay with saved card information and split their purchase into 4 equal installments. Shop Pay’s app remembers and encrypts payment details, so customers can speed safely through checkout in one tap.

Comparing the Top E-commerce Financing Providers

For quick reference, here are a few of the most important factors to consider as you choose the right financing partner for your business:

LenderRepayment TermsMinimum PurchaseSeller Fees
AffirmPay in 4 installments
Monthly financing
$505.99% + $0.30 per transaction
KlarnaPay in 4 installments
Pay in 30 days
Monthly financing
$10Variable fees up to 5.99% + $0.30 per transaction
AfterPay6 weeks$354 to 6% + $0.30 per transaction
PayPal Credit6 months special financing$993.49% + $0.49 per transaction
ShopPayPay in 4 installments$502.4 to 2.9% + $0.30 per transaction
* Information gathered July 2022

Not only will your clients benefit from the opportunity to finance their purchases, you will too. They are able to get all of the items they want and spread the payments out over time, and your AOV will increase. Ready to add financing to your site, but you aren’t sure how? Contact us, and we will be happy to help you through the process!

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