Buy Now & Pay Later - A Boon Or Bane For Consumers?

Few years back, we used to go to nearby stores to buy items like clothing, books, gadgets, and other necessities. However, with the emergence of online marketplaces like Flipkart and Amazon, shopping has become more convenient as we can now access thousands of products at the touch of a button – and at fantastic prices, too! Consumers’ purchasing habits are changing, and so are the payment ways. When you shop online at major retailers and stores, you will usually see BNPL payment plans which improve your online shopping experience. BNPL, or buy now pay later, is a new credit scheme that gives consumers the power to purchase a product immediately but pay later in flexible payments.

Although claimed to be a revolution in how people shop, the concept of BNPL is the authentic way of extending credit. For instance, with credit cards, you purchase on credit and pay the credit card bill later. That is also BNPL. Many of you might wonder, how come this new line of credit gained so much success in such a short span?

The exceptional product offering and service to Millenials and GenXis just one facet. The main reason behind the success of this credit form is the changing consumer patterns and changes in their payment modes. The pandemic has undoubtedly influenced people’s preference for contactless and cashless payment methods. This new type of easy credit has quickly gained popularity and acceptance.

The name “Buy Now, Pay Later” is so appealing that it is easy to fall for this scheme. This Pay Later Loan is similar to an instant increase in one’s credit limit without the hassle of proving credit worthiness or going through tedious documentation. Customers who use the BNPL loan scheme will find the purchasing process extremely simple and painless. In simple words, BNPL triggers consumer spending & motivates people to spend more.

Many people in India still don’t know about BNPL schemes, and the ones who do know don’t have a complete idea. So, if you don’t know too, you need to know!

BNPL allows the person to make a purchase even if he does not have immediate funds. The customer adds items to a shopping basket and, at checkout, selects the company that offers a BNPL loan. This company then pays the seller on behalf of the customer within 48-72 hours. The customer must repay the loan in instalments over a set period. This repayment is interest-free for the initial days, which makes it the most attractive feature of this service. In simple terms, BNPL is similar to a quick credit facility that allows one to apply for an instant loan without worrying about detailed clauses and terms and conditions. With the help of fintech companies, e-commerce portals promote this credit option. It is an excellent way to encourage consumerism, which improves economic growth and development.

But, is this facility a blessing or a curse? Let’s find out.