- Date : 20/01/2022
- Read: 3 mins
Here’s why the BNPL mode is a preferred option among customers today.
The Buy Now, Pay Later (BNPL) option is a convenient recourse for customers who lack the immediate funds to buy a product or a service. This payment method is easy, quick, and completely hassle-free. This rapidly growing e commerce payment system is a hit among the younger lot, as they get to shop for goods without any credit history. The pandemic has also largely contributed to the popularity of this pay later option by offering people a simplified financial solution.
Read on to find out more about the BNPL option and how it works.
Also Read: Decoding The Amazon Pay Later Offer
How does BNPL work?
The BNPL full form rightly sums up how this billing format works. Under this, you can buy a product and pay for it later in instalments or in a lump sum. The lender charges interest on the transaction, and there is a fixed period during which you are required to settle the debt.
Here’s how you can use the pay later option for online shopping:
- Visit an e-commerce website that offers the BNPL option.
- Choose an item that you like and add it to your cart.
- Select Buy Now, Pay Later from the payment options at the time of checkout.
- Pay a small amount of the price of the product and specify a payment method for the remaining portion. You can add a bank account, debit card, credit card, etc.
- The payment will be deducted from your chosen payment method over time.
Remember, if you do not pay the dues on time, you may be charged higher interest. Your credit score is also likely to be impacted.
How is BNPL different from using a credit card?
While the two may sound alike, there are some differences between them. The BNPL payment method is offered by e-commerce websites and digital payment systems, unlike credit cards that are offered by banks and other financial institutions. While credit cards may charge higher interest rates, BNPL is one of the more affordable e commerce payment methods.
The eligibility criteria to use the BNPL option is also not very stringent. But banks may conduct a more thorough screening before offering customers a credit card.
What are the benefits of using the BNPL payment method?
BNPL transactions can offer a lot of value to online customers. Let’s see what they are:
- Most e-commerce websites and digital payment wallets offer BNPL services. So, you can use this method to buy a wide variety of products and services.
- Some websites may also offer free shipping when you use the BNPL model.
- Your credit history is not taken into consideration when using the BNPL option, so most people can use it. But since it does impact your credit score, you can use it to improve your CIBIL rating.
- The interest charged on BNPL transactions is relatively lower than on credit cards.
What are some popular BNPL Apps?
Here are some popular BNPL apps you can consider:
- Paytm Postpaid
- Amazon Pay Later
The Buy Now, Pay Later payment model is expected to gain more traction in the future as online markets grow. Thanks to its seamless solutions, BNPL can benefit businesses as well as customers.