One of the fastest growing financing options in the fintech era today is the Buy Now Pay Later facility. This option has grown immense popularity among the younger groups due to its key features like swift availability of credit and instant affordability. The Buy Now Pay Later facility was started in the early 2010s to ease payments. While this facility has been in the market for almost a decade now, the Covid-19 has made this option grow by multiple folds.
According to the fourth quarter survey report 2021-2022, the Buy Now Pay Later is estimated to surge by 89.5% yearly to touch the US$ 6927.4 million mark in 2022. The payment via BNPL mode is anticipated to increase at a CAGR of 54.3% in the time of 2022 – 2028. An Insider Intelligence study report also stated that the Buy Now Pay Later has become an attractive alternative ecommerce financing option for customers today.
Though there are multiple lending options these days, the increasing popularity of the Buy Now Pay Later is due to easy availability for people with little or no credit history. To know more about the Buy Now Pay Later option, let’s start with the definition followed by the benefits it brings to the customers and retailers table, and the emerging market.
So, what’s Buy Now Pay Later?
As the name suggests, the Buy Now Pay Later allows customers to pay all their bills, shopping or utility, right now despite not having adequate cash in their wallets. It’s the advance or loan offered by the BNPL providers to the customers to relish the desired products they need. Instead of credit cards, the current younger generation are shifting their interest towards other financing options like the Buy Now Pay Later.
There are 3 parties involved in this- retailer, customer, and the BNPL provider. When the buyer makes a purchase, the BNPL provider pays the price to the retailer on behalf of the customer and closes the deal right away. On the date of payment, which is typically up to 30 days later, the customer will pay the BNPL provider and settle the short-term loan he has availed. Irrespective of whatever way you pay, you’ll not be charged any interest if you make your settlement timely. Upon missing your deadline, you will need to pay a late payment fee.
Reasons of Growing Popularity of Buy Now Pay Later
Since you have learned how the Buy Now Pay Later works, it’s time to know their benefits as well and what caused its popularity. This growing fintech model has become well-known among millennials during the pandemic phase. A lot of them find this facility captivating and secure because there’s no concealed agenda behind the process. There are so many similar reasons that led customers to opt for the Buy Now Pay Later financing facility.
1) Easy and Convenient: Generally, credit cards have a list of criterias to meet before approval, but the Buy Now Pay Later application process is rather simple. This mode of payment is easily accessible to the people who don’t have a long credit history.
2) Say Adios To Credit Card Declines: You found an amazing product in the store with a big discount sale tagged to the product. After making the purchase, you found out that your credit card declined at the time of checkout. This really frustrates the customer and ends up failing to buy their favorite product. This kind of scenario happens a lot with credit cards. Some of the other factors that really aggravates customers are lack of good offers, no rewards, credit decline, etc. This is one of the many reasons why customers find the Buy Now Pay Later facility so attractive. Here, you don’t need any cards, and no problem of card decline too. With this financing facility, customers can buy whatever they wish to.
3) Affordable Financing: We all have wishes and demands that we want to gratify. But sometimes, we don’t have sufficient cash in our hand. That’s when we turn to other financing options like personal loans and credit cards. Once getting our hands on these options, we come to a realization that the charges are exorbitant than its normal course. Thanks to the new fintech facility “Buy Now Pay Later” – it has shown the customers a ray of hope at the end of the payment tunnel. Unlike the credit cards, you don’t need to spend on paying interests and massive fees to the BNPL providers.
4) Don’t Need to Worry About Carrying Cash: Sometimes, carrying more cash in our pockets isn’t safe because of the incessant rise in thefts. Customers who find it difficult to carry more cash around and feel unsafe about credit cards, the Buy Now Pay Later is your one-stop solution for all your financial problems. The instantaneous payment facility of the Buy Now Pay Later made this facility a viable and trustworthy one among the customers. If you want to purchase now and pay for it in the future, this facility works like magic for you. Not only does it facilitate timely delivery of products to your place but also eases your financial crunch problem.
The Buy Now Pay Later facility is perfect for individuals who don’t have enough funds in their wallets. Having a basic know-how about the Buy Now Pay Later aids the customers and merchants in what they are getting into. This financing solution can come extremely handy if you use it right and at your convenience. There are many lending companies that support this alternative financing option. Case-in-point, Freecharge offers the Buy Now Pay Later facility in the name of Freecharge Pay Later to its users. Whether it’s shopping or recharge or bill payments, Freecharge Pay Later takes care of all the payments with a single click. Freecharge Pay Later offers monthly credit of up to Rs 10,000 to its customers. However, at the end of the day, it’s the customers’ job to know in-and-out about such payment platforms to gain an added advantage over others.