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Pay later, buy now (BNPL) purchasing options--like Klarna, Affirm, and Afterpay -- have made waves in the world of online shopping. Yet, many owners of shops continue to work on the introduction of the most popular payment methods.
If you're looking for more details on BNPL we are here to help. We'll review some of the most compelling advantages and disadvantages of buying today, pay later.
The Advantages of Paying Now or Pay Later
Ease and Transparency
More Customer Power for Buying
Buy now, pay later options have become favored for a reason: customers enjoy access to a greater purchasing power, with less inconvenience. If you offer BNPL options in your online store, you can help shoppers purchase more. BNPL is beneficial for sellers and buyers alike.
Customer Financial Control
In the event that customers need or want online purchases, they may encounter financial strain that holds their purchases from making purchases. Since BNPL options divide a customer's purchase across four easy payments customers have access to more financial control. Because installments are to be paid every two weeks, this requires just one small amount per normal bi-monthly check instead of a large amount.
No fees, or interest
Pay later, buy now gives you the convenience of a credit card without unnecessary costs. If customers pay their regular payment on the scheduled date, BNPL options will not cost interest or charges. In reality, the providers typically charge late fees for missed due dates.
Furthermore there are many BNPL companies offer extended financing beyond the traditional "four simple payment." These choices are similar to credit cards. They include additional installments, as well as interest charges.
But, the standard BNPL loan term will be free of interest or charges.
The downsides of Buy Now, Pay Later
It is easy for customers to get too close to the sun if they're not mindful of purchase now and pay later options. We'll take a look at some of the cons of BNPL.
Inexpensive and Buyer's Remorse
BNPL options can help to improve the financial condition of a client by letting them spread a purchase's cost over multiple pay periods. However, some users have stated that purchase today, pay later choices let them spend more than they can manage. According to Bankrate 57% of customers regret a purchase now pay later purchase because "it was expensive."
Late Fees and Financial Distress
The overextension of budgets could result in even more financial burdens for customers who buy now and paying later clients with the help of interest, late fees or damage to credit scores. In the report, the Consumer Financial Protection Bureau (CFPB) examined these issues. The report says that BNPL consumers, on an average they were "much higher-risk to be heavily indebted, revolve on their credit cards, experience problems with traditional credit products, and use the high-interest financial products."
However, the CFPB report also acknowledges that there was a financial crisis to these people prior to the introduction of BNPL. More research is needed to find out if buy-now, pay later "improves the financial health of consumers in distress or even exacerbates these disparities ."
Subscriptions, Recurring, and Purchases
Since customers are keen to commit to BNPL alternatives, they may be disappointed to find that they are incompatible with certain charges--such as subscription services.
Pay later, buy now Services are short-term, no-interest installment loans. As with most loans, the buyer's eligibility, the terms and conditions have to be approved prior to the date of sale. In this way, they may complicate pre-set recurring charges--such as the ones found in memberships and subscriptions.