The past few years have seen an increase in credit options for consumers, in particular the Buy Now Pay Later (BNPL) schemes. It is no longer just for large stores or ecommerce businesses – more and more small businesses are offering this payment method too.
Before we delve into how it works, let’s first explain what it is:
Buy Now Pay Later (BNPL) is a credit option offered at the point of sale or online checkout, allowing consumers to buy a product straight away and pay for it later through instalments.
Many of the popular BNPL schemes do not require an upfront payment, but some charges a first instalment at the point of purchase. Using a BNPL option allows customers to buy your products straight and pay them off in, say, monthly instalments without interest added.
Most BNPL providers perform a soft credit check at the point of purchase, which should not impact people’s credit rating negatively, but they may be rejected if the credit score is bad.
This form of payment is used by customers as a means to avoid credit card interest or be more flexible with their budget. Many people also use BNPL when they cannot currently afford the purchase or have no other credit options available.