BNPL (Buy Now Pay Later): All You Need to Know in Detail

Sometimes, we feel like making an impulse purchase, even if we can’t afford it at the moment. We know our account balance may not be sufficient enough to last the entire month if we make this purchase. Not all of us have credit cards and borrowing from friends or family may not seem like a feasible option.What do we do in such a scenario? The answer is simple. Buy now, pay later. Let us explore this attractive credit offering in detail.

BNPL is an enticing, cardless payment option which can let you buy now and pay later by borrowing interest-free credit as long as you repay the entire loan amount on or before the due date. In simpler terms ‘Buy Now Pay Later’ offers the features of a credit card where the borrower does not have to hold an actual physical credit card.Firms that offer the BNPL option tie-up with merchants that agree to provide the ‘Buy Now Pay Later’ option at their stores. Therefore, they are also known as ‘check-out lending platforms.’

• The primary advantage of Buy Now Pay Later options is that they provide instant credit at the point of sale itself. The customer does not have to go in search of credit providers and can make a smooth and hassle-free purchase.
• Buy Now Pay Later options aids customers in making quick payments. They are not required to swipe their card or enter their 16-digit card number or log in to their online bank account or transfer money to their e-wallet. The transaction can be easily made just by providing the generated OTP (one-time-password).
• BNPL options can also be executed via offline mode. Some platforms facilitate a QR-code supported option where a customer can scan their code and make the payment. Customers can also transact via merchants that accept UPI.

BNPL, although an enticing service option, is a credit offering. At the end of the day, taking on debt isn’t perceived as the most financially prudent step. Owing to the overly competitive environment, loan options have become easily available and quite affordable. But easy availability of credit should not be the reason why one enters into a debt arrangement.There is no point in simply trying to live beyond our means. That being said, BNPL is a suitable option for meeting a short-term credit crunch. The hack is paying on time and avoiding any interest charges. A bad payment history can negatively impact your credit rating, which shall have a consequence on your creditworthiness. In conclusion If you wish to avail the BNPL facility, please make sure to read the fine print carefully to understand not only the benefits but also the risks associated with Buy Now Pay Later options.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.