There is no doubt that BNPL is the flavor of the season – having been adopted by many eCommerce companies, banks, and retailers. This short-term credit allows first-time borrowers to make their purchases with ease while taking advantage of it. In contrast to other credit options, BNPL does not require credit history. Buy now pay later has become even more popular since the COVID-19 pandemic hit.
BNPL is supported by different online payment apps. In the checkout page of your favorite online retail store, you will see the option to choose this payment method. They offer customers an option of paying for their purchases interest-free. More than one-third of US consumers have used the service in the past few years, so the rise has been significant.
Is there any benefit to buying now and paying later? Read this article to find out.
Diving Deeper into How BNPL Works
Apps supporting the shop-now-pay-later payment method enable users to buy online and pay over time in equal installments. They can choose to pay each week, bi-weekly, or monthly.
If a customer purchases $300 from an eCommerce store, there are several payment options available to them. Choosing the BNPL option will allow the customer to make monthly payments of 50 dollars, interest-free. In accordance with the payment company’s policies, customers may be required to make a minimum down payment.
It is therefore possible for customers to avoid late fees or interest as long as they pay on time. However, this still differs from using a traditional credit card, which requires monthly interest payments.
Benefits of BNPL Payments
The BNPL payment method has some distinct advantages. Here are a few of them.
- By splitting up their payments into easy EMIs, users can make an expensive item more affordable since they can make small payments.
- Since the pay-later method does not require a hard credit pull, qualifying for the BNPL program is less of a hassle. It is helpful for people who don’t have a good credit score.
- Due to its simplicity, the payment method can be understood by most people. The transparent nature of the app makes it more convenient.
- Customers can also manage their cash flow with the help of easy-to-follow EMI plans. Easy-to-follow EMIs are usually within their budget.
It is important to know, however, that this credit option is not for people who wish to improve their credit score. Even if you pay within the due date, Buy Now, Pay Later does not improve your credit score. Before applying, it is imperative that you understand all terms and conditions.
Buy now pay later rules and regulations vary among companies, although they are based on point-of-sale installment loans. It is an excellent way to avoid hefty direct payments by completing your full payment in a split-up manner.
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