Which Payment Provider Should You Use for Offering Installments in Shopify?

Installment payment providers help Shopify merchants offer buy now, pay later (BNPL) options to customers. These services split purchases into smaller payments, reducing cart abandonment and increasing average order values for your store.

Choosing the right installment payment provider depends on your customer base, product pricing, and integration needs.

Let's explore the top options available for Shopify stores and their key features.

1. Shop Pay Installments

Shop Pay Installments is Shopify's native BNPL solution powered by Affirm. It integrates seamlessly with your Shopify checkout without requiring additional apps or complex setup.

Customers can split purchases into four interest-free payments or choose longer monthly installment plans. The service appears automatically at checkout for eligible orders, making it easy for customers to discover and use.

Pros of Shop Pay Installments

• Direct integration with Shopify admin - no third-party apps needed

• Automatic eligibility checking at checkout

• Access to existing Shop Pay user base

• Fast merchant payouts

Cons of Shop Pay Installments

• Limited customization options

• Availability restricted to certain regions

• Less control over installment terms

How to Activate Shop Pay Installments?

Go to your Shopify admin and navigate to Settings > Payments. Click "Manage" under the Shop Pay Installments section to enable the service for your store.

2. Affirm

Affirm offers flexible installment plans ranging from 3 to 36 months with transparent pricing. The service provides both interest-free and interest-bearing options depending on the loan terms and customer creditworthiness.

Merchants receive full payment upfront while customers pay Affirm over time. This reduces your financial risk while still offering payment flexibility to buyers.

Pros of Affirm

• Wide range of installment terms available

• Merchants get paid immediately

• Strong brand recognition and trust

• Detailed analytics and reporting

Cons of Affirm

• Higher merchant fees compared to some alternatives

• Strict credit approval process may reject some customers

• Limited international availability

3. Afterpay

Afterpay focuses on four equal installments paid every two weeks with no interest charges. The service targets younger consumers and works well for fashion, beauty, and lifestyle brands.

Customers must make the first payment at checkout, then complete three additional payments automatically. Late fees apply if customers miss payments, but there are no interest charges.

Pros of Afterpay

• Simple four-payment structure easy for customers to understand

• Strong appeal to millennial and Gen Z shoppers

• No interest charges for customers

• Quick approval process

Cons of Afterpay

• Limited to purchases under $2,000

• Only offers one payment structure

• Late fees can frustrate customers

• Higher merchant fees for some industries

4. Sezzle

Sezzle splits purchases into four interest-free installments paid over six weeks. The platform focuses on making purchases more affordable while helping customers build credit through responsible payment behavior.

The service includes features like payment reminders and the ability to reschedule payments. Sezzle also offers a premium subscription that provides additional benefits to frequent users.

Pros of Sezzle

• Interest-free payments for customers

• Credit building features

• Flexible payment rescheduling options

• Lower merchant fees than some competitors

Cons of Sezzle

• Smaller user base compared to Afterpay or Affirm

• Limited international presence

• Spending limits may be restrictive for some customers

5. Klarna

Klarna offers multiple payment options including pay in 30 days, four installments, and longer financing terms. The Swedish company has a strong international presence and supports multiple currencies.

The platform includes shopping features like wish lists and price drop notifications. Klarna also provides a mobile app that helps customers track their purchases and payments across different merchants.

Pros of Klarna

• Multiple payment options in one platform

• Strong international availability

• Additional shopping features for customers

• Flexible integration options

Cons of Klarna

• Complex fee structure

• Some payment options include interest charges

• Customer service quality varies by region

6. PayPal Pay Later

PayPal Pay Later leverages the existing PayPal ecosystem to offer installment payments. Customers can choose between four interest-free payments or longer financing terms with interest.

The service integrates with existing PayPal checkout options, making it familiar to customers who already use PayPal. This reduces friction in the payment process and can improve conversion rates.

Pros of PayPal Pay Later

• Familiar PayPal brand and interface

• Easy integration with existing PayPal setup

• Wide customer acceptance and trust

• Multiple financing options available

Cons of PayPal Pay Later

• Requires customers to have or create PayPal accounts

• Less specialized than dedicated BNPL providers

• Limited customization for merchant branding

7. Shopify Apps for Installments

Beyond major BNPL providers, Shopify merchants can use specialized apps to offer installment payments. These apps provide more control over payment terms and customer experience.

The Split Payment app offers four key functionalities for Shopify stores. You can enable deposit payments, multiple payment methods, shared payments, and installment payments through a single solution.

Setting Up Installment Payments with Apps

When customers buy products in installments through apps like Split Payment, they make an initial payment that you can set from 0 to 99% of the total. The app creates draft orders in your Shopify admin and sends customers invoices according to the payment schedule.

To ensure customers receive invoices, go to Settings > Checkout in your Shopify admin. In the Customer contact section, select "Customers can only check out using email" and click Save.

How App-Based Installments Work

Installment orders process in several steps within your Shopify admin. When customers create an initial installment order, it becomes visible in the app while draft orders are created for each payment part.

As customers pay each installment, new orders generate in Shopify admin for each paid part. After all installments are complete, a final order containing all parts is created - this is the order you fulfill.

How to Choose the Right Provider?

Consider your average order value when selecting an installment payment provider. Afterpay and Sezzle work well for smaller purchases under $1,000, while Affirm handles larger transactions better.

Evaluate integration complexity and your technical resources. Shop Pay Installments requires no additional setup, while third-party providers may need app installations or custom integration work.

Key Selection Factors

• Customer demographics and preferences

• Average order values in your store

• International shipping requirements

• Merchant fee structures and payout timing

• Integration complexity and maintenance needs

Testing Multiple Providers

Many successful Shopify stores offer multiple installment options to maximize customer choice. You can integrate 2-3 providers to see which performs best with your specific audience.

Monitor conversion rates, average order values, and customer feedback for each provider. Payment options that maximize conversions often vary by industry and customer base.

Start Offering Installment Payments Today

Installment payment providers can significantly boost your Shopify store's conversion rates and average order values. Whether you choose a major BNPL provider or a specialized app like Split Payment, the key is matching your solution to your customers' needs.

Split Payment offers a comprehensive solution with deposit payments, multiple payment methods, shared payments, and installment options. Try the app to give your customers flexible payment choices that drive more sales.

This article was created with assistance from vevy.ai and proofread, fact-checked, and validated by its author.