Buy now pay later on Shopify: paying the AU way

The short answer: Buy now pay later in Australia should be treated as another card-acceptance cost, not a loyalty perk. Like a card, BNPL settles the order value to you quickly, minus a merchant fee. The provider worth switching on is the one whose effective cost per order beats your existing Visa or Mastercard fees at your average order value. None of the four major providers operating here — Afterpay, Zip, Klarna and Shop Pay Instalments — publishes a standard merchant fee schedule on a public page. Since 10 June 2025, the Australian Securities and Investments Commission (ASIC) requires anyone offering BNPL contracts to hold an Australian credit licence, a duty that sits with the provider, not your store. This guide compares the fee structures, shows the order values where a plain card is still cheaper, and sets out the GST and refund rules that change your effective cost.

Most Australian merchants approach BNPL backwards. They ask which brand customers recognise at checkout, not which provider costs less per order. The logo on the button doesn't change the merchant maths.

If you're still setting up, our Shopify Australia: set up your store step by step walkthrough covers the foundations. If you're new to the platform altogether, What is Shopify, and how does it work in Australia? explains the basics. This article assumes you're past both and deciding what goes in the payment section.

Heads up: this guide uses Shopify affiliate links. Sign up through one and we are paid a commission, and you pay exactly the same as you would otherwise. If you sign up through one, we earn a commission, and you pay exactly the same as you would otherwise. Current plan prices are on Shopify's Australian pricing page.

Shopify plans, pricing and features change; always verify the current details on shopify.com before deciding.

BNPL is a processing cost, not a brand decision

A buy now pay later provider does what a card scheme does. It settles the order value to you, minus a fee. The customer gets the product now and pays the provider in instalments. You get paid upfront, usually within a day or two.

The fee structure differs from a card's. BNPL charges a percentage, typically with no fixed cents component. Cards add a per-transaction cents amount on top of the percentage. That structural difference creates a crossing point where one is cheaper than the other, and the crossing point depends entirely on your average order value.

The Reserve Bank of Australia reported in 2025 that BNPL transactions have more than doubled over five years but still accounted for only 2 per cent of retail payments. The popularity is real. The cost question is separate.

Treat BNPL as you would a card. Compare the effective cost per order at your average order value. The provider worth switching on is the one that beats your card fees at that number, not the one with the most recognisable logo.

What each BNPL provider charges your Shopify store

None of the four major BNPL providers operating in Australia publishes a standard merchant fee schedule on a public page. Afterpay, Zip, Klarna and Shop Pay Instalments each negotiate rates with merchants or, in Shop Pay's case, bundle the cost into Shopify Payments processing.

That means no comparison table can quote a verified percentage. What we can compare is the structure each provider uses, the settlement speed, how refunds are handled, and which order-value range each fits best.

PayPal also offers Pay in 4 in Australia. PayPal Australia states that Pay in 4 splits eligible purchases under A$2,000 into four interest-free instalments over six weeks, with no sign-up or late fees for the customer. PayPal's merchant fee is its standard processing rate, not a separate BNPL surcharge.

Stripe's Afterpay payment terms, published in 2026, prohibit merchants from offering Afterpay for certain categories including gift cards, alcohol and gambling. If your store sells any of these, Afterpay may not be available regardless of your preference.

Our take: The fact that no Australian BNPL provider publishes a standard merchant fee schedule is itself the finding. You cannot comparison-shop these products from a webpage. To know what Afterpay or Zip will cost your store, request a quote with your actual sales volume and average order value. Then, compare that single number against the card rate you already pay. Merchants under A$50,000 a month in turnover should start with whatever BNPL option is already bundled into their payment gateway. They should only negotiate a separate provider contract once volume justifies the conversation.

Where cards are still cheaper than buy now pay later

The crossing point is arithmetic, not opinion. BNPL fees are a percentage of the order. Card fees are a percentage plus a fixed cents amount. At low order values, the fixed cents component makes cards proportionally more expensive. At high order values, the higher percentage on BNPL makes it more expensive.

Here is the logic with a worked example. Suppose your card rate is 1.75% + 30c and a BNPL provider quotes 5% with no cents component. On a A$50 order, the card costs A$1.18. The BNPL costs A$2.50. The card wins. On a A$500 order, the card costs A$9.05. The BNPL costs A$25. The card still wins.

The BNPL percentage would need to be close to the card percentage for the maths to flip at typical Australian order values. In practice, BNPL rates quoted to merchants are higher than card interchange rates, so cards are cheaper on most orders.

The Baymard Institute found that 21 per cent of ecommerce sites have issues when offering payment options, directly causing checkout abandonments. A separate Baymard survey found 12 per cent of shoppers abandoned because they couldn't see the total order cost upfront. Offering BNPL can help with the second problem, but only if your checkout displays the instalment breakdown clearly.

If your average order value sits below A$50, the card fee's fixed cents component is a small price for keeping your checkout simple. One payment method, one fee structure, one reconciliation.

Our BNPL cost checklist (copy this):

• What is your average order value in AUD?
• What is your current card processing rate (percentage + cents)?
• What BNPL rate has the provider quoted you in writing?
• At your AOV, which fee is lower per order?
• Does your product category pass the provider's eligibility check?
• Does your gateway support the BNPL provider you want?

ASIC's BNPL reforms: what changes for your store

Since 2025, buy now pay later has been regulated in Australia as consumer credit under the National Consumer Credit Protection Act 2009. The Federal Register of Legislation records the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 (No. 138, 2024). This instrument extends the Act to BNPL contracts.

ASIC states that from 10 June 2025, anyone engaging in credit activities involving BNPL contracts must hold an Australian credit licence with the appropriate authorisations. This obligation sits with the BNPL provider, not with you as the merchant.

What changes for your store is narrower. The provider now runs eligibility checks and responsible-lending assessments on your customers. Some applicants who would have been approved before the reforms will be declined. Your conversion rate on BNPL orders may shift, and you should watch it in the first month after activation.

Your checkout copy may need adjustment. If you currently advertise "instant approval" or "no credit check," those claims may no longer be accurate under the new regime. Check with your provider before publishing them.

Your dispute process stays the same. If a product is faulty, the Australian Consumer Law still applies, and the customer's right to a refund, repair or replacement sits with you as the seller. The BNPL provider adjusts the customer's instalment plan once you process the refund through Shopify.

Partial refunds, failed payments and GST: the fine print

Partial refunds on BNPL orders work differently from card refunds. When you issue a partial refund through Shopify, the BNPL provider recalculates the customer's remaining instalments. You receive the adjusted amount back from the provider, not from the customer.

Failed payments are the provider's problem, not yours. BNPL providers assume the default risk. If a customer misses a direct debit, the provider chases the payment. You keep the settlement you already received.

GST on BNPL orders is straightforward on your side. You charge GST on the sale as normal. The Australian Taxation Office (ATO) treats the BNPL provider's supply of credit to the customer as an input taxed supply. Consequently, no GST is payable on customer fees such as late fees or account fees. That treatment sits between the provider and the ATO, not between you and the provider.

The ATO also notes that BNPL providers may be entitled to 75 per cent reduced input tax credits under Division 70 of the GST Act for specified acquisitions. This is the provider's GST position, not yours. Your GST obligations on the sale are unchanged.

Your Australian Business Number (ABN) and invoicing follow the sale, not the payment method. The invoice shows the full order value including GST. The BNPL provider's merchant fee is a processing expense, claimable as an input credit where applicable, just like a card processing fee.

For a deeper treatment of GST on Shopify sales, see our GST on your Shopify store: an Australian guide.

Set up BNPL in Shopify without a Shopify Payments catch

Shop Pay Instalments is the native BNPL option on Shopify. It appears at checkout when Shopify Payments is active and the customer's order qualifies. The merchant fee is bundled into your Shopify Payments processing rate, not billed separately.

If you use a third-party gateway instead of Shopify Payments, Shop Pay Instalments is not available. You'll need to install a provider app from the Shopify App Store and configure it as an additional payment method.

Setting up BNPL on Shopify involves a few steps:

1. Confirm your payment gateway. Shop Pay Instalments requires Shopify Payments. Other providers work with most gateways.
2. Install the provider's app from the Shopify App Store.
3. Connect your merchant account with the provider. You'll need an ABN and your store's trading details.
4. Configure the payment method in Shopify's payment settings. Set the display order at checkout.
5. Test a sandbox order before going live. Confirm the instalment breakdown appears correctly.
6. Add product-page messaging showing per-instalment amounts, if the provider's app supports it.

If you're weighing up gateway costs more broadly, our Shopify Payments in Australia: fees and setup guide covers the card processing side. And if you want to understand how app subscriptions stack on top of processing fees, What Shopify apps really cost you in AUD breaks that down.

For the full plan-cost picture, including how monthly plan fees interact with processing costs, see Shopify plans compared: the real cost for Australian sellers and How much does Shopify cost in Australia?.

Frequently asked questions

What are the exact merchant fees for Afterpay, Zip, Klarna and Shop Pay on Shopify in Australia?

None of these providers publishes a standard merchant fee schedule on a public page. Afterpay and Zip negotiate rates individually with each merchant based on turnover and average order value. Shop Pay Instalments bundles its cost into your Shopify Payments processing rate, so you won't see a separate BNPL line item. Klarna's Australian merchant fees are also quoted on application. Request a written quote from each provider with your actual sales data before comparing.

Do I need a credit licence to offer BNPL on my Shopify store?

No. Since 10 June 2025, ASIC requires anyone engaging in credit activities involving BNPL contracts to hold an Australian credit licence, but that obligation sits with the BNPL provider, not the merchant. You are selling goods, not extending credit. The provider runs the responsible-lending assessments and bears the compliance burden.

Can I offer BNPL without using Shopify Payments?

Yes, but you lose Shop Pay Instalments. That option is native to Shopify Payments and won't appear at checkout if you use a third-party gateway. You can still install Afterpay, Zip or Klarna as separate payment methods through their Shopify apps. Most major gateways support them as additional payment methods alongside standard card processing.

How do partial refunds work with BNPL orders in Australia?

When you issue a partial refund through Shopify, the BNPL provider recalculates the customer's remaining instalments rather than refunding a lump sum. You receive the adjusted amount back from the provider. The customer's instalment schedule shrinks accordingly. Full refunds cancel the remaining instalments entirely, and the provider returns the full disputed amount to you.

Is GST payable on BNPL late fees and account fees?

No, not on your side. The ATO treats the BNPL provider's supply of credit to the customer as an input taxed supply, so no GST applies to customer fees like late fees or account fees. Your GST obligation is on the sale itself, charged at 10 per cent as normal. The provider's fee treatment is between the provider and the ATO.

Which BNPL provider is best for high-ticket products in Australia?

For orders above A$1,000, most standard BNPL instalment products hit a ceiling. PayPal Pay in 4 caps at A$2,000. Afterpay's standard limit is typically A$1,000 for new customers and can rise with repayment history. For higher-ticket items, look at providers offering longer-term financing with monthly instalments rather than the four-instalment fortnightly model. Klarna and some Afterpay plans offer extended financing for larger purchases, but eligibility now depends on the provider's credit assessment under the post-2025 ASIC regime.

Sources

1. Reserve Bank of Australia, "Review of Payments System Regulation — Issues Paper: Mobile Payments, Non-designated Card Networks and Buy Now Pay Later". https://www.rba.gov.au/payments-and-infrastructure/regulatory-reviews/review-of-payments-system-regulation-2026/2026-06/mobile-payments-non-designated-card-networks-buy-now-pay-later.html — checked on 27 August 2026
2. Australian Securities and Investments Commission, "Buy now pay later credit contracts: Credit licensing (INFO 285)". https://www.asic.gov.au/regulatory-resources/credit/buy-now-pay-later-credit-contracts-credit-licensing — checked on 27 August 2026
3. Federal Register of Legislation, "Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 No. 138, 2024". https://www.legislation.gov.au/C2024A00138/asmade — checked on 27 August 2026
4. Stripe, "Afterpay / Clearpay Payment Terms". https://stripe.com/au/legal/afterpay-clearpay — checked on 27 August 2026
5. Australian Taxation Office, "GST considerations for buy-now, pay-later providers". https://www.ato.gov.au/law/view/view.htm?docid=%22GFS%2FGST-buy-now — checked on 27 August 2026
6. Baymard Institute, "Payment UX: Research-Backed Standards for Ecommerce Checkouts". https://baymard.com/learn/payment-ux — checked on 27 August 2026