The advancement of technology and the evolution of e-commerce have paved the way for new ways of making payments. Sometimes, even though people have sufficient cash in their wallets, they prefer to use other modes of payment like credit cards, personal loans, etc. Now, another short-term financing option is going rounds in the market for swift online payments, i.e. Buy Now Pay Later. 

Also known as BNPL, this facility comes in handy for every shopaholic customer who prefers online payments over liquid cash. In this blog, you’ll be learning in-depth about the Buy Now Pay Later concept followed by a list of advantages, and finally, the future of BNPL.

First, Let’s Understand What is Buy Now Pay Later?

Who doesn’t love shopping? Well, that’s a rhetorical question. Because, frankly, everyone does. Earlier, there were only limited financing options for customers to pay at the shopping counters, but today, there are many options available to a user. Other than personal loans and credit cards, there’s a new credit financing option called Buy Now Pay Later readily available for customers to use at the time of online or offline purchases. 

This facility provides instant interest free credit to the customers. This financing option aids customers to make their purchases without fretting about cash in their wallets. The Buy Now Pay Later facility grants credit to the customer every month with a promise in return to repay later. Upon making a purchase, the Buy Now Pay Later facility settles the bill straightaway on your behalf. Long story short, this facility lets you to Buy whatever you want instantly, allowing you to pay back at a Later date. 

Who should use Buy Now Pay Later?

What sets Pay Later apart from Credit Cards or Personal Loans is its fast and simple approval process. This avenue is ideal for those who are not eligible for credit cards because of no or short credit history. For example, Buy Now Pay Later is a great option for young millennials or early jobbers who find it difficult to get the credit card of their choice or a personal loan at a good rate of interest.  In Fact, it’s a good way to build a good credit history. 

If you are new to the BNPL system, register on any of the provider’s platforms and complete your KYC formalities and then get started. Once your application is approved, which typically takes just a few seconds, you can start using the limit instantly. So, whether it’s shopping for groceries or medicines, or apparel, this facility takes care of everything.

How Does Buy Now Pay Later Work?

So far, we have touched upon the basics of the Buy Now Pay Later system. Now, it’s time to know how it works in the real world. The Buy Now Pay Later model just works the same as credit cards but there’s more to the working concept than what meets the eye. 

This model offers instant payment settlement options to the customers. When you make any purchase, the amount of that purchase is settled by the BNPL provider on your behalf, and you get an interest-free window of up to 30-45 days to pay back that amount to your BNPL provider.

Unlike personal loans, there’s no interest levied for the Buy Now Pay Later facility if the outstanding amount is cleared within the interest-free window. If you don’t pay by the due date, you will be charged a late fee.

A big benefit of BNPL is that you need very little credit history to avail of this service. Those even without a credit history can be eligible for BNPL. 

Here are some of the basic attributes considered while approval of a BNPL facility. 

  • The customer must and should be an Indian by birth.
  • The customer should stay in tier 1 or tier 2 cities.
  • The customer should be more than 18 years old. The maximum age is up to 55 years.
  • The customer should ideally be a salaried individual drawing a monthly salary.

Advantages of Buy Now Pay Later

As you have seen the functionality of Buy Now Pay Later, knowing its advantages will clear your head as to why you should opt for this facility.

1) Easy and Convenient: It is easy and convenient to use BNPL as you can make payments with just 1 tap. There is no need to remember CVVs and pins, no need to carry multiple cards. Everything is digital and available at a tap of your finger on your mobile phone.

2) Swift Set-Up:  The application process, approval, and set-up of the BNPL facility are swift and effortless when compared to the credit card. The application consists of a few basic details like personal information, PAN, etc. Post-approval, the customer gets a certain credit balance followed by the billing dates to manage payments accordingly. The user can start using their limit instantly. 

3) No Cost Involved: The reason BNPL grabbed attention over other financing options is because of its interest-free nature. The only time the lender is going to charge you is when you don’t follow the billing cycle properly and not pay on time. However, if you use this facility responsibly, you don’t need to incur any additional costs in the form of penalties or late fees.

4) Offers and discounts: BNPL has been steadily gaining popularity and acceptance in the last few years. And one of the major reasons for its growing popularity is the attractive deals and discounts you can avail of using this mode of payment when making purchases.             

5) A Perfect Substitute for Credit Card: The BNPL financing option is a very good alternative for credit cards. If you are one of those credit card users whose request has been rejected for either not having a very high credit score or lack of past credit history, BNPL becomes an amazing alternative due to its easy approval. 

Future of Buy Now Pay Later

The Buy Now Pay Later financial model is pretty inimitable compared to other financial models. This facility propels and encourages new and old customers to make instant purchases offline and online at their convenience. The interest-free repayment option and comparatively easier access steer more customers to opt for this facility over credit cards and personal loans in the future.

However, this is a loan given to the customer at the end of the day. So, they still have to repay this at some point of time in the future, on or before the specified period. 

This financing option can become a standout solution for customers if used effectively and properly by meeting all the norms and repayment deadlines. This is to avoid paying interest, late fees, and plummeting credit scores.

Now after knowing all about BNPL if you want to get a BNPL service for yourself, On The Freecharge App, you can check out the freecharge pay later. It gives you an interest-free credit instantly for up to 30 days with which you can shop online/offline at 40,000+ stores with just one tap. So do check it out and let us know in the comment section how did you enjoy using it. 

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