The atmosphere for online buying has changed dramatically over the last few years, impacting how e-commerce works. Even for daily necessities, customers are already turning to online shopping. Small-value purchases and e-commerce are quickly taking over as their primary sales channel.
What Is Buy Now Pay Later (BNPL)?
The ‘Buy Now Pay Later’ option, also known as BNPL, allows you to make purchases without paying cash upfront. Once you sign up for this service, the lender accepts a predetermined sum on your behalf. You must pay back the money within the allotted time frame. You have two options for paying back this money: through cash or Equated Monthly Instalments (EMIs).
Why Is Buy Now Pay Later (BNPL) Becoming Popular?
In its current form, BNPL provides simplicity and efficiency. Consumers who want to avoid the inconveniences of advance payment with each transaction utilise the delayed payment method, a convenient option offered by Buy Now Pay Later. This is a payment option that works without you requiring to pay the interest if the sum is paid within the 30-day repayment period. Consumers wishing to immediately purchase desired goods or services and pay for them later in affordable EMIs utilise the Buy Now Pay Later. The EMIs vary from three to twelve months and have minimal interest rates.
How Does Buy Now Pay Later (BNPL) Work?
You can choose the Buy Now Pay Later option when you purchase goods at one of the partner stores that provide this service. Once you use this service, you will need to pay a certain sum, representing a tiny portion of the purchase price. Following the down payment, you may set up your repayment plan in a series of interest-free EMIs and take pleasure in your transaction without stressing the price. Participating retailers pay the supplier a predetermined charge on each transaction in addition to a commission of 2 to 6 per cent.
Advantages Of Buy Now, Pay Later (BNPL)
By giving clients a variety of payment methods, BNPL helps to improve the shopping experience of the customers. Here are a few benefits:
- For most customers, the zero-interest option is the most alluring since it helps make casual purchases possible.
- ‘Buy Now, Pay Later is a flexible alternative to credit cards. With credit cards, you are required to fulfil the qualifying conditions and provide the proper documentation when applying. But the “Buy Now, Pay Later” service is simple to use.
- Regardless of the value of the items, it provides numerous payment methods. It is helpful when clients wish to buy big or bulky items and pay the entire purchase price upfront. Therefore, providing various payment choices benefits in drawing in new clients and keeping hold of old ones.
- Additionally, it has changed how people purchase online. Any kind of purchase can be carried out using the “Buy Now, Pay Later” concept without worrying about the cost. In turn, using this model enhances the customers’ shopping experience.
Relation Between BNPL And the Credit Score
Most BNPL service providers check the credit score of the customer. A credit score is a 3-digit number that expresses your level of personal creditworthiness. Lenders use it to determine how likely you are to pay back any loans within a given period. Few apps do not require your credit score to increase the credit limit. Your credit limit is determined by your work, pay information, and other factors besides your credit score.
Giving customers multiple alternatives and a variety of payment methods is essential. The inclusion of a “Buy Now, Pay Later” option boosts sales, decreases cart abandonment, and builds customer trust.