Those who have frequented various stores or online portals have checked out whether a store or the website offers the option of buy now pay later. The BNPL or buy now pay later is one of the most preferred options these days. It allows the shoppers to purchase whatever they want and pay later. This is not limited to clothes shopping or grocery shopping. You can buy whatever you want from air tickets, hotels, food delivery, furniture, and all other essentials.
Buy now pay later shopping
Shoppers who avail buy now pay later shopping are offered short-term loans on purchasing items that they want. This can be availed on offline and online stores. All the customers who want to avail this facility need to download the BNPL app from any app store, or you can visit its website to register for the service. You can register for the facility using basic KYC documents. Once this is done, the customers can use the BNPL app to check out at stores. The customers can pay the amount in 4-5 EMIs or lump sum as they find it convenient. One can also check out directly at buy now pay later stores.
Duration of Buy Now Pay Later
Some BNPL apps require a person to pay a down payment, which may amount to around one-fourth of the total amount, while others do not require a person to pay anything in advance. Whether a person needs to pay any amount completely depends on the BNPL app. Whatever remaining amount is left, needs to be paid in a few days or weeks, depending on the plan. One can pay the amount in a lump sum or in some installments. While some lenders limit the number of payments, others allow borrowers to choose their own payment system. There is an interest-free period which generally lies between 15 days to a month. After the free period, the person needs to pay some extra charge.
What can the BNPL app be used for?
The BNPL app can be used for all sorts of purchasing. It can range from foods, medicines, groceries, and daily essentials to clothing, furniture, accessories, jewelry, travel tickets, and others. One can buy different things together and pay all the amount together instead of making individual payments. This is like a credit card where you can buy things and pay for them at the end of the month. Unlike credit cards, you don’t have to pay any interest if you are paying within a fixed period.
The main advantage of the BNPL app is that you don’t have to pay any interest on the amount borrowed unless you convert it to EMIs, where you have to pay a small interest per the company’s policy. If the buyer is unable to pay on time, then he/she might be charged with interest.
How does the BNPL model work?
Some E-commerce players tie up with either a bank or a Non-Banking Financial Services company. When a consumer makes a purchase, he or she can make use of the Pay Later option in the payment option and finish the purchase. By doing so, the consumer can repay the amount over the next few weeks or months as pre-decided by the e-commerce company. But if the consumer is a first-time buyer, then he or she will have to complete a KYC application form. If the seller company approves this application with a given credit limit, then the said consumer can take advantage of the pay later option. Pay Later repayment can be done in the following two ways:
Auto repayment: This is a one-time setup done during registration or at the time of the first purchase.
For this setup, i.e., auto repayment setup, the consumer is required to link his/her debit card/bank account of selected banks through one verification transaction of up to Rs 5. This amount, in turn, will be given back within 5-7 business days to the consumer’s bank account. Once this is done, the due amount of the consumer will be automatically deducted from his/her linked bank account/debit card. In this way, the repayment is made hassle-free.
Manual repayment: The consumer can opt for this function for manual repayment of the installments or full outstanding balance either through debit card, UPI, or net banking of any bank.
Easy to use: The biggest advantage of BNPL products is the convenience. To use this option, one has to download the app, sign in, check one’s spending limit, and finally start shopping. This helps customers in availing better facilities using buy now pay later.