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Part of the guideOffer pay-later in Nigeria: get paid today, customers pay later
The short answer
A pay-later provider pays you for the sale and charges a merchant fee, usually a percentage of each sale and sometimes a fixed or monthly charge as well. Nigerian providers rarely publish merchant rates, so you get a quote; for comparison, US providers averaged 2.49% in 2021, well above the 0.5% (capped at ₦10,000) that the CBN's April 2026 draft proposes for card acceptance. Whether it is worth paying depends on your gross margin and how many extra sales the option brings.
When a customer buys on pay-later, the provider pays you for the item and collects from the customer over the following weeks. You pay a fee for two things: being paid in full now, and not carrying the risk that the customer fails to repay. This article explains how that fee is built and how to test a quote against your own numbers. For the wider picture of how point-of-sale credit works, start with our guide to offering pay-later in Nigeria.
What a merchant fee is made of
Providers describe their pricing in different ways, which makes quotes hard to compare. Break any offer into these parts and add them up.
- Percentage of each sale. Often called the merchant discount rate. This is usually the largest part.
- Fixed amount per transaction. A flat naira charge on top of the percentage. It hurts most on small tickets.
- Monthly or platform fee. A subscription for access to the dashboard, payment links or till integration, charged whether you make sales or not.
- Set-up or integration fee. A one-off charge, more common for online checkouts than for QR codes at a counter.
- Faster-settlement premium. Some providers charge more to pay you the same day rather than in a weekly batch.
- Promotional cost. Where the customer is offered 0% interest, the provider still has to be paid. That cost is often built into a higher merchant fee.
- VAT on the fee. The provider's fee is a charge for a service. Ask whether the quote includes VAT, which remains 7.5% under the Nigeria Tax Act 2025.
Note also what is not a fee but still costs you: money clawed back if a customer disputes a sale, refunds you must return to the provider, and the gap between the sale and the day the money arrives. We cover that last cost in how merchant settlement works with pay-later.
What the market shows
There is no public table of Nigerian pay-later merchant rates. Consumer comparison sites list what customers pay, not what shops pay. A 2026 Nigerian comparison, for example, shows customer costs ranging from 0% interest on one product to several per cent a month on others, but gives no merchant pricing. The useful benchmarks come from abroad and from Nigeria's card market.
| Payment type | Typical cost to the merchant | Status |
|---|---|---|
| Bank transfer to your account | Usually low; depends on your bank or collection service | Varies by provider |
| Card at a POS terminal | 0.5% per transaction, capped at ₦10,000, borne by the merchant | Proposed in the CBN's April 2026 draft Guide to Charges; check the final version |
| Pay-later, United States | Averaged 2.49% of the sale among large providers in 2021 | CFPB market study |
| Pay-later, Nigeria | Not published; quoted per merchant | Negotiable; get it in writing |
The Federal Reserve Bank of Richmond notes that pay-later merchant fees are often higher than card fees, and reads merchants' willingness to pay them as a sign that the extra sales make it worthwhile. That is the right way to think about it: the fee is a marketing and risk cost, not a payment-processing cost. Compare it with what you would spend to win the same sales another way, and with what informal credit already costs you in bad debts.
Worked example: what a fee does to your profit
Take a household goods shop that sells ₦3,000,000 a month at a 20% gross margin, so it earns ₦600,000 gross profit. Suppose a quarter of sales, ₦750,000, move to pay-later. The table shows the monthly fee at three illustrative rates and the extra sales needed just to cover it. These are made-up rates for illustration, not any provider's price.
| Illustrative fee | Monthly fee on ₦750,000 | Extra sales needed to cover it (at 20% margin) | As a share of current sales |
|---|---|---|---|
| 2% | ₦15,000 | ₦75,000 | 2.5% |
| 4% | ₦30,000 | ₦150,000 | 5.0% |
| 6% | ₦45,000 | ₦225,000 | 7.5% |
The formula behind the table is simple: the share of sales on pay-later, multiplied by the fee, divided by your gross margin. At 25% of sales on pay-later and a 4% fee, a 20%-margin shop needs a 5% lift in total sales to stand still. A clinic or salon with a 60% margin would need under 2%. A supermarket with a 10% margin on staples would need 10%, which is why low-margin sellers often set a minimum basket for pay-later.
On a single sale the effect is easy to see. A ₦250,000 fridge at a 20% margin earns ₦50,000. At a 4% fee, ₦10,000 goes to the provider and ₦40,000 stays with you. If the customer would otherwise have walked away, you are ₦40,000 better off. If they would have paid cash anyway, you are ₦10,000 worse off. Our article on pay-later and average order value looks at how often the first case happens.
Questions to ask before you sign
- What is the full fee: percentage, fixed amount, monthly charge and set-up cost? Is VAT included?
- Is the fee the same for every sale, or does it change with ticket size, sector or the customer's repayment plan?
- When will I be paid, and does faster settlement cost more?
- Is the agreement non-recourse? In which cases, such as fraud or disputes, can you take money back from me?
- What does a refund cost me, and is the fee returned when a sale is refunded?
- Is there a minimum monthly volume or a penalty for leaving?
- Who is the lender, and is it registered with the FCCPC or licensed by the CBN?
- Can I see a sample settlement report so I can check how fees will appear?
Can you pass the fee on to customers?
It is tempting to add a few per cent to the price when a customer chooses pay-later. Keep one shelf price instead. The lender is responsible for telling the customer the full cost of credit before they accept it, and a hidden mark-up at the counter muddies that disclosure and risks a complaint under the Federal Competition and Consumer Protection Act. Treat the fee as a cost of winning the sale, in the same line of your accounts as card fees and promotions. If the numbers do not work at one price, the answer is usually to offer pay-later only above a minimum basket or on higher-margin lines, not to charge credit customers more. Our guide to telling customers you offer pay-later covers how to present the option fairly.
Where Pryme fits
Spaces is Pryme's merchant network for pay-later in Nigeria only, in naira. The credit is lent to the customer by Solid Allianze Microfinance Bank Ltd, a CBN-licensed microfinance bank; Pryme Financial provides the technology. That answers the first question on the list above: the lender is Solid Allianze MFB. Customers are offered a spending limit based on how they run their Pryme account, and they see and accept the full agreement before anything is drawn. A Spaces limit can be spent only with businesses that have joined Spaces, Pryme's merchant network, so a customer holding that credit can use it only inside the network. Spaces merchant terms, including the fee, settlement timing and how refunded sales are treated, are not published in this article; ask for them in writing at support@mypryme.com and run them through the table and questions above, as you would with any provider.
For sales that are not on credit, Checkout takes bank transfers free of charge. For how fees fit into the whole decision, see the parent guide on getting paid today while customers pay later.
Questions people ask
How much do BNPL providers charge merchants in Nigeria?
Most Nigerian providers do not publish merchant rates and quote each business separately. As a reference point, the largest US providers averaged 2.49% of the sale in 2021. Ask for the percentage, any fixed or monthly fees and whether VAT is included.
Is pay-later more expensive than accepting cards?
Usually, yes. The CBN's April 2026 draft proposes a card merchant charge of 0.5% capped at ₦10,000, while pay-later fees are typically several times that. The difference pays for the provider taking the credit risk and bringing customers who could not pay in full.
Can I add a surcharge for customers who pay later?
It is safer not to. The lender must disclose the cost of credit to the customer, and a hidden mark-up at the till risks a consumer protection complaint. Keep one price and treat the fee as a cost of sale.
How do I know if the fee is worth it?
Multiply the share of sales you expect on pay-later by the fee, then divide by your gross margin. The result is the sales lift you need to break even. If you expect a larger lift than that, the fee pays for itself.
Do I get the fee back if a customer returns an item?
That depends on the agreement. Some providers refund the fee on a returned sale and some keep it. Ask before you sign and check how refunds show up on the settlement report.
Sources
- CFPB: Buy Now, Pay Later market trends and consumer impacts (2022) · accessed Oct 2026
- Federal Reserve Bank of Richmond: Buy Now, Pay Later: Market impact and policy considerations (Economic Brief 25-03) · accessed Oct 2026
- MSME Africa: CBN caps banking charges to reduce costs for MSMEs (Apr 2026) · accessed Oct 2026
- Candide-Johnson: Nigeria's new banking charges framework (CBN 2026 exposure draft) · accessed Oct 2026
- NairaCompare: The complete guide to buy now, pay later in Nigeria (2026) · accessed Oct 2026
- Forvis Mazars: VAT and Nigeria's 2025 tax reforms · accessed Oct 2026
- FCCPC: Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations, 2025 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.