BNPL functions just like any credit-based instrument, like a credit card. In addition, SALT provides
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BNPL makes money from both sellers and consumers. In case of sellers, they pay BNPL a fee ranging between 2% and 8% of the purchasing amount if the customer uses the BNPL facility. BNPL players also make money by solidifying their positions through various marketing or promotional spend given that the seller is able to increase conversion or traffic.
BNPL players making money from customers by charging an interest ranging between 10% and 30% based on their credit score, repayment tenure, etc. As long as the amount is repaid on time, no interest is charged. However, there are customers who may not be able to repay the amount by the due date, on which a late fee is charged. The payment of late fee adds to the BNPL company’s revenue.
Yes, BNPL is a type of installment loan as you pay the amount spent by you via Equated Monthly Installments (EMIs). After a certain period, interest is charged on the amount spent by you, and in case you fail to pay within the stipulated period, penalty is levied. A repayment tenure is set within which the amount is to be repaid.
Yes, you will have to pay interest on BNPL. The interest charged depends on various factors such as the amount spent, repayment tenure, credit score, etc. Initially, there is a credit free period offered by some companies. If you manage to repay the amount within that period, you will not be required to pay any interest on it.
You can use the buy now pay later facility both online and offline. If you are purchasing an item online, you can use the BNPL facility to make the payment instantly. Similarly, in case of Point of Sale (POS) transactions, you can use the facility to make the payment by simply QR scanning the code and completing the payment. You will not be required to enter any pin or one-time password (OTP). The only thing you should be mindful is that the merchant should have BNPL as their payment option.
As long as you repay the amount on time, your credit score will not be impacted. If you clear the amount on time, you credit score is likely to improve. However, if you miss or delay your payments, then you credit score will fall.
If you do not pay BNPL amount, then you will incur a significant amount of debt, as the company will continue to charge interest on the amount to be repaid. Further delay in the repayment of the amount will also lower your credit score which will make it difficult for you to avail loans or credit card in future. There is a possibility that you may not be allowed to use the BNPL facility in future if you do not pay the amount back in time. Even if you are allowed, a very high interest rate is likely to be charged by the BNPL company.
Yes, banks such as Axis Bank, Kotak Mahindra, ICICI Bank, etc. are offering the BNPL facility to their customers.
A GST rate of 18% will be applicable on banking services and products from 01 July, 2017.
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