Has it ever happened that you wanted to shop for some product, but the price was too high, or you didn’t have enough cash with you and lost out on an amazing opportunity? Well fear no more as with Buy Now Pay Later service, a customer can afford almost anything instantly and be able to grasp all of the best offers available. Earlier credit cards were used for this however, with the high rate of interest on even small amounts, the usage of credit cards went down over a period of time.
Must Read: A Retailer’s Guide to Buy Now Pay Later Apps
What is Buy Now Pay Later?
BNPL is a payment service wherein a customer can buy any product or take a loan of any amount from the vendor and then pay it back in a series of instalments over a defined amount of time. These instalments don’t have any interest rate, making it quite easy to pay back and widely accepted.
An example of how Buy Now Pay Later helps in acquiring products can be stated as – Suppose you want to buy a laptop which costs $800; you could use Buy Now Pay Later service and break down this amount into 4 instalments or more as per the agreement with the vendor. Every month, the customer has to pay $200 without any interest fee. If a customer fails to pay any of the instalments, then he/she would be charged an interest fee which is decided between the BNPL vendor and customer at the time of availing this loan.
Many Gen Z and Baby Boomers prefer Buy Now Pay Later services to shop online and for other needs. The main reason for doing so is that Buy Now Pay Later services do not require you to have a good credit score.
It has been seen that BNPL services reached a transaction volume of $120 billion in 2021, while it was just $33 billion in 2019. This is mainly because the Gen Z and Baby Boomers are adopting this service on a large scale.
Must Read: Apply for Buy Now Pay Later Without Worries of Credit Checks, and Get Your Most Desired Phone
Approval system of Buy Now Pay Later –
For getting a personal loan or for a credit card, the approval process is quite long and tedious. Sometimes it takes as much as a week, and still, the money is not reimbursed into the account. However, with Buy Now Pay Later service, the approval process is quite fast, and all a customer needs is a bank account and should be above 18. The KYC process is digital, and all the documents are to be uploaded to the vendor site. Depending upon the documents uploaded, the approval can come within one day as well.
Unlike credit cards, the vendor doesn’t look at your credit score for Buy Now Pay Later service. This makes it quite easy for the young generation to afford many of the things which they might not be able to as they have just started their career and don’t have a strong credit score to back them up.
How BNPLs help customers and businesses?
Buy Now Pay Later is used by both customers and the business. How the BNPL business model works is that the BNPL vendor takes charges a fee of 2% to 8% from the business on the amount that a customer pays at the store. This is the primary way for the BNPL vendor to make money. Businesses have stated that the customers who use this service as a payment method have an order value of 20 to 40% more than regular customers, which makes businesses quite profitable, and they do not mind giving out the 2 to 8% to the BNPL vendors.
On the other hand, customers, if they shop at the right time, can save up to 30% every year if they use Buy Now Pay Later service as there is no interest on the borrowed amount, and if you buy in bulk, the amount of money you save is quite high.
Buy Now Pay Later facility will surely be overtaking the credit card industry in a short span of time. This is the right time to get on the Buy Now Pay Later facility as many of the vendors and businesses are providing good offers and discounts for customers using this as a payment option. Buy Now Pay Later facility will definitely change the digital financing world, and this would be a good tool to have in hand to save money for future shopping and needs. The future of Buy Now Pay Later facility looks quite strong however, this entirely depends if the customers able to pay their amount on time.
Must Read: Top 17 Best Buy Now Pay Later Apps (BNPL) in India
