Buy Now Pay Later (BNPL): The New Challenger to Credit Cards
Buy Now Pay Later (BNPL) has become a formidable challenge to credit cards. Although consumers are choosing BNPL over credit cards, they are becoming a replacement for traditional cards. From young adults to underbanked, BNPL has given new online buying power to lakhs of individuals with restricted access to credit. It doesn’t need a CIBIL record check, it’s interest-free (as long as you make repayment timely), and you can utilize the benefit even if you are not qualified for a credit card. Furthermore, the pandemic has induced a hike in online shopping, soaring customers’ usage of BNPL to extend their payments over time without paying interest. With the expansion in the BNPL industry, consumers need to stay familiarized with the risks and benefits linked with financing their purchases through this service.
With the rapid expansion of BNPL in India, we have chosen to educate our readers with some helpful information.
We are aiming to answer two fundamental questions:
What is Buy Now, Pay Later?
What is pushing its growth?
What is Buy Now, Pay Later?
Buy Now Pay Later, or BNPL is a popular financing option that enables shoppers to purchase a product or service without stressing about paying for it directly. Instead, the Buy now pay later creditor pays the merchant or service provider at the point of sale and permits you to pay back the used credit amount at a future date with minimal or no interest charges. The user can repay either in a lump sum or EMIs.
What is pushing its growth?
As BNPL is an excellent alternative for a credit card, its primary growth is due to the advantages that BNPL has over credit cards.
Benefits to User
Instant key to credit: If you face difficulty getting a credit card, BNPL is the excellent credit alternative available. With BNPL, the user receives instant credit to make a smooth and frictionless purchase.
The comfort to use: Some BNPL platforms like SALT support a QR-code. With the UPI scan & pay feature, you can scan the code to make a payment. At the same time, others permit you to complete BNPL transactions via UPI.
Interest-free repayment: The BNPL lender gives you an interest-free period of 15 days to make repayment. If you repay the used credit amount timely, no charges will be charged.
Improves CIBIL: If you have no CIBIL history, you have to build it with the help of BNPL. Also, if you pay timely, your CIBIL score will improve.
Safety and security: BNPL helps customers make secured payments without swiping their card, entering a PIN, keying in their net banking details.
In conclusion, while BNPL is an attractive offer for consumers, it is essential to evade getting carried away. Hold financial and credit discipline to maximize this credit opportunity to your benefit.