As e-commerce expands, customers often except for flexible payment options for their purchases, especially when buying expensive items. Shopify merchants now meet that demand by using Shop Pay Installment, a Buy Now, Pay Later (BNPL) solution for a payment schedule at checkout. Instead of paying the full amount upfront, customers split payments into equal and manageable installments. This helps the store owner to improve the shopping experience, sales, and conversion rate, while receiving full payment immediately. In this guide, you will learn how to activate Shop Pay Installments, how it works, and optimize it to boost sales and conversions.
What is Shop Pay Installments?
Shop Pay Installments is a buy now, pay later (BNPL) method offered by Shopify in partnership with Affirm, a third-party payment provider. This service is available only to merchants in the United States and Canada. Merchants must have both Shop Pay and Shopify Payments activated on their store to offer this payment option.
This service allows customers to split their total purchase amount into smaller payments, both online and in-store. Customers have to choose between two payment options: either four biweekly interest-free payments or monthly installment plans from 3 to 12 months. The availability of monthly plans and interest rates depends on the purchase amount and customer eligibility, as determined by Affirm.
Key features of the Shop Pay Installments:
Reduce Cart Abandonment: When customers see that the total costs are too high, they may hesitate and leave the cart. Offering pay in installments breaks down the total costs, making it easier for buyers to purchase.
Increase Average Order Value: Customers are more likely to add more to their cart when they break the total cost. For example, some customers are not eligible to spend the $400 upfront but may feel more comfortable with four payments of $100.
Fast Payment: The merchants don’t have to wait for customers to complete their installment payments. Once a transaction is approved, Shopify and Affirm pay the full order amount to the merchant within 1 to 3 business days.
Boost Sales: Paying in installments attracts more shoppers by making the price more affordable. This expands your reach and increases the chances of converting visitors into buyers.
How Shop Pay Installments Works?
When customers select the installment option at checkout, the total amount breaks down into equal biweekly or monthly payments, depending on the order value and eligibility.
Add Items to Cart: Customers select items from the store, they want to purchase and add to their cart.
Checkout with Shop Pay: At checkout, select Shop Pay as your payment method.
Select Installments: Select the payment option Installments. If eligible, they will see available options based on their order value or credit approval:
- Two biweekly payments for orders from $35 to $50.
- Four biweekly payments for orders from $50 to $999.99.
- Monthly payments for orders from $150 to $30,000, spread over 3, 6, or 12 months with interest rates 6% to 36% APR.
Review and Confirm: Customers review the orders, total cost, installment plan, and make their first payment at checkout.
Automatic Payments: The remaining payments are automatically charged from the customer's selected payment method. They will also receive email reminders before each due date.
How to Activate Shop Pay Installments in Shop Pay?
Activating Shop Pay Installments is a straightforward process, but the configuration setup must be followed with careful consideration.
- Check Eligibility Criteria
- Access Payment Settings
- Enable Shop Pay
- Test the Setup
1. Check Eligibility Criteria
Before proceeding, check that your store meets these Shopify conditions:
- Your store is based in the United States or Canada.
- Your store currency is set to USD or CAD.
- Both Shopify Payments and Shop Pay are activated in your store.
You cannot enable Shop Pay Installments unless you fulfill the criteria mentioned above.
2. Access Payment Settings
Log in to your Shopify store with your associated email and password.
Navigate to Settings>Payments to manage your active payment providers.
3. Enable Shop Pay
In the Shopify Payments section, click Manage. In the search bar, type Shop Pay and select from the list of available payment methods. Then click save.
If you are eligible for the premium package, you can offer more options to your customers.
4. Test the setup
To confirm that everything is working fine:
Add an eligible product to your cart ($50–$20,000). Go to checkout and select Shop Pay.
Verify that the Installments option appears and complete a test transaction.
How to Activate Shop Pay Installment for Shopify POS?
If you are using Shopify POS in your retail location, activating Shop Pay Installments improves your in-store customer experience and flexibility.
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In the admin dashboard, go to Settings> Payments.
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In the Shopify Payments section, click on Manage.
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Select Shop Pay from the list of available payment methods and then click Save.
If you are eligible for Premium installment options, click on Manage, and tick the Enable Shop Pay Installments point of sale.
If you are not eligible for Premium installment options, check Enable Shop Pay Installments on Point of Sale.
Best Practices to Use Shop Pay Installments?
Effectively using Shop Pay Installments requires more than just enabling this feature. This feature helps store owners increase conversion and average order value.
Promote Installment Method: Add a banner on your homepage or create a dedicated page to explain how this installment plan works. This helps increase awareness and optimize conversions.
Add an FAQ Section: Create a dedicated FAQ section on your product pages. Answer common questions about Shop Pay Installments, such as how it works, who qualifies, how many payments are involved, and what happens if a payment is missed. This helps customers better understand this installment method more clearly.
Email Marketing: Send targeted email campaigns to inform your customers about the availability of Shop Pay Installments. Additionally, customers can pay off their installments early without charging any penalties, which can help them save on interest fees.
Select Best Product: Customers are more likely to use installment plans for products that feel investment. Offer this plan to the right or best-selling product of the store to increase sales.
How Merchants Receive Shop Pay Installment Payments?
When an order is placed by using Shopify Pay Installments, merchants will receive full payments in 1 to 3 business days, deducting the Shopify Pay Installments fee. Affirm is responsible for collecting payments from your customers, and you receive your payouts from Affirm to the same bank account that you use for Shopify Payments. The store owner is not responsible if a customer fails to complete their installment payments.
Can You Adjust the Price Range for Shop Pay Installments Order? No, you cannot manually customize the price range for Shop Pay Installments orders, including discounts, shipping, and taxes.
If the order exceeds $20,000 USD, the customer has to pay a down payment for the remaining balance. For example, if the total order value is $25,000, the customer must pay $5,000 in advance, while the remaining $20,000 is divided into installments based on the selected installment method.
