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Wednesday, June 4, 2025
Is Buy Now, Pay Later the Credit Card Killer?
Having a limited budget is a timeless constraint for many, and the digital shift is just the right way to tackle it. Buy Now Pay Later (commonly by that acronym he is called BNPL).
Even good old brick-and-mortar stores are now moving to these models that allow customers to pay over time.
BNPL is expected to surge over the next few years, following Apple. AmazonGoogle, master Card, visaWhen PayPal I threw my hat in the ring.
Simply put, BNPL is seen as a short-term way of funding customers who want to buy goods and services and pay later.
This works like a POS microloan that can be offered online and offline.
Often with little or no interest, they are attractive to many.
Buy Now, Pay Later operates on the basis of POS installment loans and has become a popular payment method for online shoppers.
How is BNPL different from using a credit card?
The principle is the same. Anyone using BNPL can purchase products and services and pay in monthly installments.
As has happened with many recent technological developments, the digital BNPL market has been spearheaded by fintechs.
Banks were skeptical at first, but quickly realized that BNPL and credit cards could complement each other.
In fact, banks have seen an opportunity to use BNPL as an entry point for clients who are reluctant to use credit cards. This is one of the many reasons banks and fintechs are partnering today.
BNPL’s seamless onboarding is key to the process, but the lack of scrutiny compared to credit cards still puts many on the back burner.
How does “Buy now, pay later” work?
First and foremost, the terms of service will vary depending on the fintech operating the BNPL loan.
In general, BNPL may require a down payment that is part of the purchase price. In some cases, there is even a company operating his BNPL without any down payment from the client.
The remaining balance must be paid back in interest-free payments over a set repayment period later.
You can pay by bank transfer or direct debit from your savings account. You can also pay using a debit card or credit card.
Naturally, individuals using the Buy Now Pay Later method must fully disclose how much they are paying and when and how often they are paying.
Are there any restrictions on BNPL?
yes. The terms of the BNPL provider, the amount of capital an individual seeks to access based on her credit score, and the nature of what the user intends to purchase (some types of purchases may be restricted). .)
How do I know if I am eligible for Buy Now, Pay Later?
Approvals are generally reviewed after a soft credit check. This means the provider may check the user’s credit score before actually committing.
Will buying now and paying later affect my credit score?
For now, no. BNPL may start appearing on credit reports, but it won’t be considered, at least not initially.
How are fintechs profiting from BNPL trading?
Fintechs offering BNPL services act as lenders. That is, merchants are compensated by them when trading.
Fintech companies offering BNPL willingly accept the risk of non-repayment by acting as payment processors and taking on the responsibilities of lenders.
In doing so, fintechs charge merchants a fee as a means of compensating for potential risks. Fees can typically vary between 2% and 8%, but the main point is that Fintech will pay the difference between what is paid and what is collected through a timeframe + fees established by BNPL. to put it in your pocket.
What are the benefits of Buy Now, Pay Later?
Both customers and merchants benefit from relying on BNPL. Customers have the opportunity to purchase products and services that they may not have enough money to purchase at the time.
Additionally, BNPL is much easier to register than a credit card and you can manage your repayments.
As for merchants, onboarding is also easy, so BNPL is seen as a major factor in reducing payment friction.
In fact, diversifying payment methods is appreciated by customers as it enhances their purchasing experience. This means that the average value of transactions can also be higher due to the increased conversion rate and the nature of BNPL.
Finally, BNPL can lead to repeat purchases as a direct result of positive shopping experiences.
The last word
BNPL cannot be circumvented. However, the system still lacks the necessary rigor and scrutiny. Given the lax credit checks, BNPL has found its way into the younger generation and those who have previously struggled with credit problems.
Time will tell about the future of BNPL as countries develop their regulatory frameworks.
Admittedly, it’s a fairly flexible option for consumers, but as Big Tech emerges, it’s FinTech, whose revenue models are proving unsustainable, that BNPL could kill.
Having a limited budget is a timeless constraint for many, and the digital shift is just the right way to tackle it. Buy Now Pay Later (commonly by that acronym he is called BNPL).
Even good old brick-and-mortar stores are now moving to these models that allow customers to pay over time.
BNPL is expected to surge over the next few years, following Apple. AmazonGoogle, master Card, visaWhen PayPal I threw my hat in the ring.
Simply put, BNPL is seen as a short-term way of funding customers who want to buy goods and services and pay later.
This works like a POS microloan that can be offered online and offline.
Often with little or no interest, they are attractive to many.
Buy Now, Pay Later operates on the basis of POS installment loans and has become a popular payment method for online shoppers.
How is BNPL different from using a credit card?
The principle is the same. Anyone using BNPL can purchase products and services and pay in monthly installments.
As has happened with many recent technological developments, the digital BNPL market has been spearheaded by fintechs.
Banks were skeptical at first, but quickly realized that BNPL and credit cards could complement each other.
In fact, banks have seen an opportunity to use BNPL as an entry point for clients who are reluctant to use credit cards. This is one of the many reasons banks and fintechs are partnering today.
BNPL’s seamless onboarding is key to the process, but the lack of scrutiny compared to credit cards still puts many on the back burner.
How does “Buy now, pay later” work?
First and foremost, the terms of service will vary depending on the fintech operating the BNPL loan.
In general, BNPL may require a down payment that is part of the purchase price. In some cases, there is even a company operating his BNPL without any down payment from the client.
The remaining balance must be paid back in interest-free payments over a set repayment period later.
You can pay by bank transfer or direct debit from your savings account. You can also pay using a debit card or credit card.
Naturally, individuals using the Buy Now Pay Later method must fully disclose how much they are paying and when and how often they are paying.
Are there any restrictions on BNPL?
yes. The terms of the BNPL provider, the amount of capital an individual seeks to access based on her credit score, and the nature of what the user intends to purchase (some types of purchases may be restricted). .)
How do I know if I am eligible for Buy Now, Pay Later?
Approvals are generally reviewed after a soft credit check. This means the provider may check the user’s credit score before actually committing.
Will buying now and paying later affect my credit score?
For now, no. BNPL may start appearing on credit reports, but it won’t be considered, at least not initially.
How are fintechs profiting from BNPL trading?
Fintechs offering BNPL services act as lenders. That is, merchants are compensated by them when trading.
Fintech companies offering BNPL willingly accept the risk of non-repayment by acting as payment processors and taking on the responsibilities of lenders.
In doing so, fintechs charge merchants a fee as a means of compensating for potential risks. Fees can typically vary between 2% and 8%, but the main point is that Fintech will pay the difference between what is paid and what is collected through a timeframe + fees established by BNPL. to put it in your pocket.
What are the benefits of Buy Now, Pay Later?
Both customers and merchants benefit from relying on BNPL. Customers have the opportunity to purchase products and services that they may not have enough money to purchase at the time.
Additionally, BNPL is much easier to register than a credit card and you can manage your repayments.
As for merchants, onboarding is also easy, so BNPL is seen as a major factor in reducing payment friction.
In fact, diversifying payment methods is appreciated by customers as it enhances their purchasing experience. This means that the average value of transactions can also be higher due to the increased conversion rate and the nature of BNPL.
Finally, BNPL can lead to repeat purchases as a direct result of positive shopping experiences.
The last word
BNPL cannot be circumvented. However, the system still lacks the necessary rigor and scrutiny. Given the lax credit checks, BNPL has found its way into the younger generation and those who have previously struggled with credit problems.
Time will tell about the future of BNPL as countries develop their regulatory frameworks.
Admittedly, it’s a fairly flexible option for consumers, but as Big Tech emerges, it’s FinTech, whose revenue models are proving unsustainable, that BNPL could kill.
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