With the advent of technology and advancements, we have been molding ourselves to the new tech world for a very long time and will continue to do so. One of the most important fields of innovation in the area of business was e-commerce. E-commerce proved to be a successful deal. Along with E-commerce came the ideas of online modes of payments to facilitate quick payments and promote the digital era.
There were several modes of payments available already involving the terms of credit that enhanced the trade and business for people who lacked the availability of funds. Customers availed the facility of credit that helped them overcome the hindrance of being broke and purchase with ease.
However, the credit card facility was, in itself, not easy to access as it came along with several prerequisites, including documentation and interest repayments.
To resolve this problem, Paytm has now come to the rescue, and helps the consumers for online shopping . It has launched a new easy-to-access credit facility of BNPL. This helped the users to buy what they like without any hesitation.
Buy now pay later, often regarded as BNPL, is a new-age short-term credit facility that allows the customers to buy any of the desired product or services without making payments at the Point of sale. BNPL works akin to a credit card. However, the difference lies in the way of credit availability and the feasibility of use.
The customers can make the payments later with zero or negligible interest rates within the stipulated period, and this is even more favorable. The target audience of BNPL is the youth and college-going students who don’t usually have credit cards and want to make quicker payments.
BNPL offers an interest-free credit period varying from 15 to 45 days depending upon the amount and type of purchase. In addition, the credit allowed also varies from Rs 500 to Rs 30,000, which can be extended to 1,00,000 depending upon the credit-worthiness of the buyer.
The benefits of BNPL are two-fold:-
- Benefits to the consumers
- Benefits to the Retailers
Benefits of BNPL to the customers
- The customers are at a relief to not to worry about being broke being the end of the month. BNPL works as a Point Of Sale loan allowing the customers to pay later and shop at ease.
- Shoppers enjoy the credit facility without paying charges and interest for the same. Customers hereby appreciate no interest payments if paid within the given stipulated time.
- It comes as a rescue to an emergency purchase. In case you mistakenly carry less cash or are not in access to any other mode of payment at the moment, you can still make it via BNPL at the Point of sale and make the payment to it later.
- The signup process is extremely easy and quicker than credit cards. BNPL doesn’t require you to submit long lists of documents with the banks or fulfill any formalities other than the KYC.
Increase in sales
Lack of funds, when required, has often been an obstacle between the retailers and the customers. However, BNPL has broken the shackles of Buying only when the pockets are full. Buy now pay later has provided the customers with the convenience of handling their budgets and purchases. This has resulted in a comparatively immense number of purchases by the customers eventually benefiting the retailers by a tremendous jump in the sales revenue.
With the beginning of buy now, pay later, the customers who were not making the purchases earlier are now buying their desired products and services. As a result, the scope and reach of the retailers have expanded providing the retailers with new customers and reach. As per the recent analytics, the new customers are generally the youth, who are willing to experience the latest tech and be a part of it. This is helping both the economy and the customers.
The customers, who are habitual of making purchases from a particular shop or a brand, bring loyalty to the company and the retailers. However, at times, the unavailability of funds does not allow the customers to act upon as loyal customers, and they hesitate to make the required purchase. BNPL has brought back the customer’s loyalty as the e-commerce platforms of their preferred brands allow them to pay later and buy now. This helps in contiuik Io 0
Reduction in bad debts
Earlier it was very common for the customers to not pay back the amounts either due to high-interest rates or in the case of casual relationship credits. However, buy now, pay later has brought down the cases of abandonment cases of purchases. Since this Point of Sale loan is free of excess formalities and charges a lesser or n rate of interest, the customers do not feel the burden of debt finance and are in a better happier space to make the payments within the stipulated credit period.
Conclusion Buy now pay later is the future of commerce and e-commerce trade platforms. Since the BNPL facility has an edge over credit cards, the core of bringing credit cards into the picture has been affected. BNPL is an active and better alternative to credit cards with lower acquisition costs and almost no threshold requirements. In addition, Buy now, pay later has kept in mind the security and safety of the customers as well as the retailers.
In order to avoid any unwanted usage of BNPL and the unfair means, the credit limit and the credit period have been directly linked to the timely repayments. The repayment schedule of the customers determines their creditworthiness and maintains their credit history, which enables them to extend their limits. In addition, the retailers get the security of timely repayment. Thus, it is most probable for us to see the BNPL facility successfully replacing credit cards at large, and helping the economy
Aline Huseby is a Sales & Marketing Manager at ChargeAfter. She would like to share content on Finance Industry like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable reader.