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Buy Now Pay Later: A Complete Guide on (BNPL)

  • 22-Apr-2022
Buy Now Pay Later: A Complete Guide on (BNPL)

What is BNPL Payment? 

BNPL stands for Buy now pay later is a payment option where the individual can buy without paying from their own pocket.  

Basically, the individual can sign up with the company whom offering this type of facility that makes the payment when you purchase something. 

However, once the lenders pay on your behalf, you will have to repay the amount within the specified time period. The amount can be paid as a lumpsum or paid via no cost Equated Monthly Installments (EMIs). 

Certain interest will be charged on your amount when you fail to pay the amount within the given repayment period and delay payment could affect your credit score wisely. 


Benefits of BNPL 

The benefits of buy now pay later are listed below: 

  • No cost EMI
  • Increases affordability
  • Easy and smooth process
  • Immediate access to credit
  • Secured transaction
  • You can select the repayment option


Briefing about BNPL Concept 

BNPLs are short-term loans that let online and offline purchases, via apps like Phone pay, Google pay, and Paytm to make immediate payments.  

It allows the customers to purchase products, and then pay for them within a specific period.  

  • Duration

This loan requires an upfront deposit payment showing a portion, as 25% of overall purchase amount.  

Then the remaining balance should be paid off in monthly installments within a few weeks or months. 


What about the cost? 

In terms of cost, BNPL plans do not charge any interest, but if the consumer fails to pay the amount within a specific period, then buy now pay later providers to charge interest on it and it affects your credit history and CIBIL Score. 


Eligibility criteria for Buy now pay later 

  • The applicant must fulfill the eligibility criteria of BNPL
  • The age of the applicant should be above 18 years, and the maximum age of eligibility is up to 55 years.
  • Nationality must be the resident of India.
  • Your residence must fall under tier 1 cities (Delhi, Chennai, Bangalore, Mumbai, etc.) and tier 2 cities (such as Agra, Aligarh, Bareilly, Amritsar, Aurangabad, Ajmer, etc.)
  • The borrower must be salaried.
  • KYC documents and a bank account must be required.


BNPL players in the Indian Market 

BNPL players of the Indian market are listed below: -  

  • Flexmoney
  • Capital Float
  • EPayLater
  • Ola Money Postpaid
  • LazyPay
  • ZestMoney
  • Amazon Pay Later
  • Simpl
  • Paytm Postpaid



What is a Credit card? 

A credit card is a line of credit offered by various banks and financial service providers that allows cardholders to use the card to pay for purchases up to a specified limit. Applicants repay the borrowed amount plus interest and other applicable charges either in full or partly as per the scheduled bill date. 


Advantage and Disadvantage of Credit cards 

Advantage Disadvantage 
It helps to increase your credit score and credit history. Sometimes, it leads to overspending. 
Safe and secure to use as compared to carrying cash. Interest rates increase if payments are not made on time. 
Offers benefits like a discount at retailers, complimentary airport lounge access, fuel discount, etc. Applying for too many credits might damage your credits. 


Below is detailed information of Credit cards and BNPL 

If you want to increase your purchasing power while acquiring reward points, discounts, and many other benefits then credit cards are the best option. 

Moreover, it helps to build your credit history and CIBIL Score over time. Whereas buy now pay later depends on offers and availability. 

While you opt for BNPL, verify terms and conditions so that you can pay back the amount on time to keep away from penalties and interest charges. 


Pros and Cons of BNPL 

Pros  Cons  
Fast and instant approval If not used carefully can lead to overspending 
Smooth repayment option in the form of Monthly Equated Installments The repayment frequency is fixed by the retailer. 
It is interest-free It encourages you to buy things that are not pocket friendly. 


Difference between BNPL and Credit Card 

It is not compulsory to have a credit history. It is essential to have a good credit history to get a credit card. 
BNPL services are offered by Fintech organizations and e-retailers. It comes with more flexible acceptance. 
BNPL is a low-cost pricing model. Hidden charges are levied on credit cards. 
Hassle-free approval Credit card approval is slightly difficult. 
No such benefits You can get reward points, cashback, Airmiles on purchases. 
Interest free duration can range up to 48 months. A standard Interest-free period can be obtained under credit cards. 
The applicant must pay the EMI on a scheduled date. The borrower has the choice to pay only the minimum due amount. 


Comparison of interest rates between Credit cards and BNPL 


  • Up to 48%
  • The rate of interest remains fixed
  • It does not levy interest when you pay an amount within the due date.
  • The individual gets an interest-free grace period ranging between 30 to 45 days.

BNPL (Buy now pay later) 

  • Up to 28%
  • The interest rate differs depending on various factors.
  • It levies a penalty when you don’t repay the amount for a specific duration.


Future of BNPL 

The future of Buy now pay later can be intense as the market is expected to reach $20.4 Billion by 2028 and more than $1 Trillion in annual GMV (Gross Merchandise Volume) by 2025. 

The concept of BNPL attracts many customers to buy an item instantly. 

Several banks that provide such facilities give repayment at no-cost EMIs, which in upcoming years is likely to become a Favored payment option among the youth. 


How does BNPL work? 

Buy now pay later share providers follow the same operational model with terms and conditions being only differentiators. 

  • It enables you to purchase at a participating retailer.
  • Choose the buy now pay later option.
  • It allows the individual to make a small down payment of the total purchase amount.
  • The remaining amount can be subtracted from the interest-free EMIs.


How to make the best use of BNPL? 

Consumers of Buy now pay later frequently make purchases that they cannot afford. Low amounts can trick individuals into spending more than they actually should.  

Before you finance every aspect with a BNPL loan, understand the specification of the facilities. If you have already borrowed too much money, prefer to avoid obtaining such facility anymore. 

Borrowers who fall under the youngster category should keep in mind that it affects your credit history. Your future creditworthiness depends on your present financial activities. 

If you use the credit limit and pay back the amount on time, your credit history and score will be enhanced.

Also read: - Business Credit Cards – All you need to know

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