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Buy nowand pay later (BNPL) purchasing options--like Klarna, Affirm, and Afterpay -- have made waves in the world of e-commerce. Yet, many owners of shops are working on introducing the most popular payment methods.
If you need more clarification about BNPL we are there to assist you. Let's take a review some of the greatest advantages and disadvantages of buying nowand pay later.
The Advantages of Paying Now and Pay Later
Ease and Transparency
Additional Customer Power for Buying
Buy now, pay later options have become favored for a reason: Customers can benefit from a higher buying power with minimal hassle. By offering BNPL choices in your online shop, you will be able to help customers to buy more. BNPL benefits sellers and buyers alike.
Customer Financial Control
If customers are looking to make to make purchases online, they might find financial stress holding their purchases from making purchases. As BNPL choices divide the customer's purchase across four easy payments, buyers can access much greater financial control. Because installments are due every two weeks, it is only one tiny installment per bi-monthly pay instead of one large sum.
There are no fees or Interest
Buy now, pay later allows you to enjoy the flexibility of payment offered by a credit card, without the expense of additional fees. If customers pay their regular payments on time, BNPL options will not cost interest or charges. But, they often make late charges on missed payments.
In addition there are many BNPL companies offer additional financing options beyond the standard "four easy installments." The financing options work more like credit cards. They include extended installments and interest rate fees.
The traditional BNPL loan terms do be free of interest or fees.
The Cons of Buy Now, Pay Later
Customers can easily fly too close to the sun if they're not mindful of buy now, pay later options. We'll take a look at some of the disadvantages of BNPL.
Overspending and Buyer's Remorse
BNPL choices can improve a customer's financial situation as they allow them to spread the purchase's cost over multiple pay periods. However, some users have reported that buy now, pay later options allow them to purchase more than they can afford. According to Bankrate, 57% of consumers regretted a buy now, pay later purchase , citing that "it cost too much."
Late Fees and Financial Distress
Overextended budgets can bring on even more financial burdens for buyers who purchase now or pay later customers in the form of fees for late payments, interest, or credit score damage. The Consumer Financial Protection Bureau (CFPB) investigated these concerns. Their findings state that BNPL consumers, on average are "much greater likely be heavily indebted to their credit cards, suffer from delinquencies in traditional credit products as well as use credit cards with high interest rates."
However, the CFPB report also notes that financial distress was apparent for these consumers before the advent of BNPL. It is necessary to conduct more research to find out if buy-now and pay later "improves the financial health of those in financial distress, or even exacerbates these disparities ."
Subscriptions, Recurring, and Purchases
As customers are eager to sign up to BNPL options, they might be disappointed to discover that they're incompatible with specific charges--such as subscription services.
Buy nowand pay later services are short-term, interest-free installment loans. As with most loans, the buyer's eligibility, the terms and conditions need to be approved at the point of sale. In this way, they may create problems with pre-setrecurring charges, like that found in memberships and subscriptions.