BUY NOW PAY LATER (BNPL) 2023 – PROS AND CONS

Theme:

What is Buy Now Pay Later(BNPL)?

Buy now, pay later (BNPL) services can help you finance purchases over time, but you can incur fees if you miss payments. These fees can make your purchase more expensive than originally planned. It’s important to use the buy now, pay later services with a plan for how you will pay your installments before you click “buy.”

• BNPL payments are expected to grow by 22.9% on an annual basis to reach US$14,289.4 million in 2023. The BNPL payment industry in India has recorded strong growth over the last four quarters, supported by increased e-commerce penetration. The medium to long-term growth story of the BNPL industry in India remains strong.
• Buy now pay later services in India are about to cross USD 7000 million in 2022-23. 22% of consumers in India buy goods using BNPL services. The 26 to 35 age group is the primary segment of the BNPL market in India.

India BNPL Market Share Analysis by Key Players:

• Simpl
• ZestMoney
• LazyPay
• Capital Float
• PineLabs
• Paytm Postpaid
• OlaMoney Postpaid
• Amazon Pay Later
• Flipkart Pay Later

Buy now, pay later Pros:

It’s no secret that buy now, pay later services have risen dramatically in popularity. The volume of BNPL loans from five leading service providers increased by 97% between 2019 and 2023, according to a report by the Consumer Financial Protection Bureau.

People love the opportunity to pay according to their schedule, use the service for online or in-store purchases, and receive cheap or free credit. Some pros to using buy now, pay later include:

1. Split-up Payments- The main advantage of BNPL services is the ability to break down payments into manageable chunks. You don’t need to have all the cash in your pocket that day when making the big purchase. Most buy now, pay later services split the cost across multiple payments spaced two to four weeks apart. This payment lock is often used with bi-weekly payroll plans to help replenish your bank account before the next payment.

2. 0% Financing  – If you pay your BNPL on time, you will generally not pay any interest, and pay users later. If you want to cancel the payment without paying any service charges or interfacing 0% of the money have the appeal of making the BNPL scheme works well.

3. Get finance without credit cards – Some buy now, pay later services don’t check your credit before approving you. For those who are new to lending or rebuilding their credit, BNPL can offer feasible financing options.

Cons of Buy Now, Pay Later:

Just because it makes spending easier, buy now, pay later isn’t necessarily safer for your finances. Using buy now, pay later services can open users up to financial risks that may not be worth the convenience in the end. Some BNPL cons include:

1. Fees and Interest
If you miss a BNPL payment, you may be charged late fees or interest on your unpaid balance. Depending on the amount charged by the BNPL lender and how these fees are structured, they can add up quickly. Buy now, pay later services can also turn your account over to a collection agency. Besides accruing more fees and interest during this timeframe, your credit score could also be put in danger.

2. Possible Overdrafts
Frequent, automatically scheduled payments could increase the potential for bank account overdrafts if you aren’t careful. If you set BNPL payments to draft from your checking account automatically, it’s important to remember the schedule and make sure enough funds are in your account. Add these dates to your calendar and make sure you leave enough after each paycheck deposit to meet the next payment date so you avoid late payments.

3. Easy to Overextend Finances
One of the biggest dangers of using BNPL services is that it can be easy to overextend your finances. Only looking at the cost of each payment may make it difficult to register the full cost of the item. Especially when you make several purchases with buy now, pay later arrangements, bills can rack up—and be challenging to juggle.

4. Miss Out on Rewards
If you typically shop with a credit card but are considering using buy now, or pay later for a purchase, remember that you’ll forgo your rewards and other credit card benefits. BNPL services typically do not have a reward structure like credit cards. You also won’t get other credit card benefits, like purchase protection. There are workarounds, like paying off your buy now, pay later bill with a credit card to get rewards points, but this may be overly complicated for some shoppers and could end up costing you more if you can’t pay your full credit card bill.

Alternatives to Buy Now Pay Later (BNPL):

• Credit Cards
• Personal loans
• Store Financing Deals
• Delayed purchases

Conclusion:

Thus, Buy Now, pay later (BNPL) is a type of short-term financing that allows consumers to make purchases and pay for them over time, usually with no interest. Before buying a product choosing a plan is the most important step. BNPL can be useful but it can also render you with an amount shortage. Plan and act for better administration.