Buy now, pay later\u00a0(BNPL) is a type of short-term financing provided to consumers to purchase instantly and pay later. The process involves multiple players, such as consumers, financiers, and merchants. The financier performs a soft\u00a0credit check\u00a0on the customer and returns a decision within seconds. Financiers pay merchants on behalf of consumers when they purchase goods or services.<\/p>\n
The consumers later repay these payments over time in equal periodic installments. The number of installments and the length of the repayment period differ depending on the BNPL financier. The financier offers this service for free to the customer<\/a>. So, how do BNPL financiers earn from this system?<\/p>\n BNPL service providers take a fee from the merchant\u2019s purchase price.\u00a0This fee tends to be higher than that charged for credit or debit card transactions. Financiers charge a late fee when consumers fall behind on payments and sell delinquent accounts to\u00a0debt collection agencies.<\/p>\n Consumers get a 0% line of credit without any complicated application process. Target customers like students, freshers, and homemakers find this attractive. Retailers\u2019 sales increase as BNPL customers increase spending, and they also need not bother with collection.<\/p>\n BNPL has spread across different spending zones, from buying products to paying for hotel rooms. BNPL thus serves as a strong alternative to traditional payments with a flourishing future. BNPL brings the below churn in the industry:<\/p>\nBenefits of BNPL<\/h2>\n
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Differences Between BNPL Over Other Lending Methods.<\/h3>\n