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Pay later, buy now (BNPL) purchasing options--like Klarna, Affirm, and Afterpay have made their mark on the world of e-commerce. But, many store owners continue to work on the introduction of these popular payment options.
If you need more clarification regarding BNPL We are here to help. We'll take a look at the greatest pros and cons of buy nowand or pay over time.
The Pros of Buy Now, Pay Later
Ease and Transparency
Additional Customer Buying Power
Buy nowand pay later choices are increasingly popular because consumers can enjoy more powerful purchasing power and less hassle. By offering BNPL options on your website shop, you will be able to help shoppers buy more. BNPL is beneficial for both buyers and sellers.
Customer Financial Control
If customers are looking to make to make purchases online, they might find financial stress holding them from making purchases. As BNPL choices divide the customer's purchase into four simple payments the buyer has access to more control over their finances. With installments due every two weeks, it is only one tiny installment per bi-monthly pay instead of one big sum.
No fees, or interest
Buy now, pay later allows you to enjoy the flexibility of payment that a credit card offers without unnecessary costs. When customers make their scheduled payments in time, BNPL options will not charge interest or fees. But, they often have late charges for non-payments. payment dates.
Additionally some BNPL service providers provide an extended form of financing that goes beyond "four quick installments." These financing options work more like credit cards and include the option of extended installments as well as interest rate costs.
But, the standard BNPL loan terms do exclude interest or charges.
The downsides of Buy Now, Pay Later
It is easy for customers to get too far from the sun when they're not cautious with buy nowand pay later options. Let's look at some of the cons of BNPL.
The overspent and buyer's Remorse
BNPL options could help customers improve their financial position as they allow them to spread the purchase cost across multiple paychecks. But, some customers have complained that the buy today, pay later choices allow them to purchase greater than they are able to afford. According to Bankrate, 57% of consumers regretted a buy now, pay later purchase , citing that "it was too expensive."
Late Fees and Financial Distress
Budgets that are stretched too far can result in an additional burden on financial resources for buy now, paying later clients in the form of interest, late fees or damage to credit scores. It is the Consumer Financial Protection Bureau (CFPB) looked into these problems. Their report states that BNPL customers, in general they were "much higher-risk to be highly indebted and rely on credit cards, experience problems with traditional credit products, and use the high-interest financial products."
However, the CFPB report also notes that there was a financial crisis in these individuals prior to the advent of BNPL. Further research is required to find out if buy-now or then pay over time "improves the financial health of those in financial distress, or exacerbates these differences ."
Subscriptions and Recurring Purchases
Since customers are keen to make a commitment to BNPL choices, they could be disappointed to discover that they're incompatible with specific fees, such as subscriptions.
Buy now, pay later services are short-term, interest-free installment loans. As with most loans, the buyer's eligibility, the terms and conditions must be approved at the point of purchase. This means that they could make it difficult to set up recurring fees, such as the ones found in memberships and subscriptions.