Has it ever happened to you that there is an offer or discount sale at any of the stores, but you are not able to buy the product as there is a cash deficiency? Not to worry any more, with Buy Now Pay Later services, customer can fulfill all their shopping desires at ease and never miss out on good opportunities.
Shop now, pay later, or buy now pay later – also commonly known as BNPL has tremendously grown over the last couple of years, especially during the Covid 19 pandemic. During the lockdown period, the shopping frequency of people grew extensively, and everyone started relying heavily on online payment methods. This paved the way for a new payment scheme- Buy now, pay later.
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What exactly is Buy now Pay later?
Buy now, pay later schemes allows the payer to pay the purchase price in installments. The buyer would be required to purchase from partners associated with BNPL, and once approved, he could opt for any payment plans as per his desire. The partners associated with Buy Now Pay Later service are growing on a large-scale day by day, and thus a person can buy anything right from daily groceries to electronic equipment.
Many of the businesses also found that with Buy Now Pay Later service, their customer acquisition costs got lower, and there was an increase in order value per customer by 20% to 30% in a short span of time. This has made businesses quite profitable, and they are giving out more offers to customers who use Buy Now Pay Later service as a payment option while shopping.
People won’t have to wait for their salary to be credited or wait for the next offer season with Buy Now Pay Later service. Many people have stated that this service if used with proper planning, will help save good money in the long run as no interest fee is applied.
Must Read: Apply for the Buy Now Pay Later Facility With Guaranteed Approval
Split Payments system in Buy now, pay later–
Credit card companies earlier started split payments; however, they were not quite a hit as the interest rate charged by these companies were quite high, and most of the time, the customers had a hard time paying off the remaining amount as with the interest rate the amount would be quite high. This led to the development of Buy Now Pay Later services to come into the split payments sector.
The very core attractiveness of Buy Now Pay Later Service is the split payments of the total amount on any product or a loan. Customers can buy anything they want, and the BNPL vendor would pay the whole amount to the business. Now it is the responsibility of the customer to pay the BNPL vendor back the full amount in a series of split payments, also known as installments. There is no interest charged on this amount as long as the customer pays the installments on time. If the installment is missed, then the Buy Now Pay Later vendor charges an interest fee on the principal loan amount, and the customer has to pay the revised amount now.
An example of this could be – Suppose you want to buy a laptop for $1000, and you put in a deposit of $200. Now rest of the $800 is paid by the Buy Now Pay Later vendor, and the customer has to pay $200 every month as a split payment to the Buy Now Pay Later vendor for 4 months. If the customer fails to pay the 3rd instalment, an interest fee would be charged on the remaining $400, and the customer will have to pay the new amount.
Must Read: A Retailer’s Guide to Buy Now Pay Later Apps
Is Credit score affected due with split payments?
Buy Now Pay Later Apps do not report your activities to the credit bureaus. Thereby, the credit score won’t be affected even if you take more than one loan. The split payments won’t alter the credit score since there is no interest rate on them and also since it is not reported. However, some of the Buy Now Pay Later vendors to report their activities to credit bureaus, but this would be first told to the customer, and they could also opt-out of this service.
Buy Now Pay Later service has grown considerably from 2019 as there has been an increase of 30% in customers accepting this as one of the payment methods. Therefore, having Buy Now Pay Later service can help you at tough times and also help you to save money by doing the right buying at the right time.
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