Buy now pay later (BNPL) is a shopping payment option that enables customers to delay paying for a product or service for an agreed period of time – hence the name ‘buy now, pay later’. In other words, BNPL is a type of short-term financing that allows consumers to make purchases and pay for them over time.
BNPL is also commonly known as a point-of-sale (POS) installment loan that doesn't charge interest. Using BNPL financing can be convenient, but there are also some potential things to consider. Consumers can make purchases using BNPL services offered by traditional and online retailers or through apps provided by third-parties.
It's mostly used for beauty and apparel purchases, as well as travel, health care, groceries, fuel, etc. Some purchases may not be eligible for buy-now-pay-later financing. Also, there are limits on the amount that you can finance this way. Most BNPL loans range from $50 to $1,000, but typically ranges from $200 to $5,000 for B2C, and up to no limits with our B2B options (only limited by the beneficiary business' capacity).
PANDEMIC CATALYST
Pandemic lockdowns accelerated the already growing popularity of Buy Now, Pay Later (BNPL) transactions.
BENEFITS
BNPL offers numerous benefits to both consumers (individuals) and businesses. Compared to traditional credit cards and personal loans, BNPL loans are fairly easy for consumers to get approved for.
BNPL generally won’t affect your credit score unless you make late payments or fail to pay.
During economically hard times when inflation is high and interest rates rise, BNPL may be a helpful option for people making purchases.
HOW BNPL WORKS
BNPL programmes have different terms and conditions. They generally offer short-term loans with fixed payments, no interest, and no additional charges. This means you know your payment amounts up front, and each payment will be the same.
You can use a BNPL mobile or web app to make the purchase, or you may have BNPL options through integrated platforms like ours.
With BNPL, you can make a purchase at a participating retailer and opt for buy now, pay later at checkout. If approved, you make a small down payment, such as 25% of the overall purchase amount. You then pay off the remaining amount in a series of interest-free installments, usually over a few weeks or months.
With us, you typically don't pay the 25% upfront until you have taken delivery of the product or service.
REPAYMENT
Payments can be deducted automatically from your debit card, bank account, or credit card. You may also be able to pay via check or bank transfer in some cases, although most BNPL providers give consumers no choice other than autopay.
BNPL vs CREDIT CARD
The main difference between using BNPL and a credit card is that the credit card generally charges interest on any balance carried over to the next billing cycle, aside you needing to have an existing bank account with a provider. Although some credit cards offer 0% annual percentage rates (APRs), it may only be for a limited time. With a credit card, you can carry a balance or use your credit line indefinitely.
NO or OPTIONAL CREDIT CHECK
Most BNPL Providers only require a soft credit check for approval, which doesn’t affect your credit score. However, others may conduct a hard pull of your credit file, which could knock a few points off your score temporarily.
RELATED PAGES