YouTube icon
Buy nowand pay later (BNPL) payment options such as Klarna, Affirm, and Afterpay -- have made waves in the world of e-commerce. However, many shop owners continue to work on the introduction of these popular payment options.
If you need more clarification regarding BNPL we are there to assist you. We'll look at some of the best advantages and disadvantages of buying today, pay later.
The Advantages of Paying Now or Pay Later
Accessibility as well as Transparency
More Customer Power for Buying
Buy now, pay later options have become favored due to the fact that customers enjoy access to a higher buying power with minimal hassle. When you provide BNPL options on your website store, you'll be able to assist buyers to buy more. BNPL is beneficial for both sellers and buyers.
Customer Financial Control
If customers are looking to make purchase online, they could be unable to afford the purchase and may feel that financial pressure is holding them from making purchases. Because 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 payment per standard bi-monthly paycheck instead of one large sum.
No fees, or interest
Pay later, buy now can provide the payment flexibility that a credit card offers without the expense of additional fees. When consumers make their planned payment on time, BNPL options will not charge interest or fees. However, providers often charge late fees for missed payment dates.
Additionally some BNPL companies offer additional financing options beyond the standard "four quick payments." The financing alternatives are more similar to credit cards and include extended installments and interest rate charges.
The traditional BNPL loan terms do not include any interest rates or charges.
The cons of Buy Now, Pay Later
It is easy for customers to get too near to the sun, if they're not cautious with purchase now and pay later and pay later. Let's review some of the cons of BNPL.
The overspent and buyer's Remorse
BNPL options could help improve a customer's financial situation through the possibility of spreading a purchase's expense across several paychecks. Some users have complained that the buy nowand pay later plans let them spend more than they can afford. According to Bankrate 57% of customers regretting a buy now buy later, purchase due to "it cost too much."
Late fees and financial distress
Overextended budgets can bring on an additional burden on financial resources for buyers who purchase now or consumers who pay later with the help of fees for late payments, interest or damage to credit scores. The Consumer Financial Protection Bureau (CFPB) examined these issues. Their report states that BNPL consumers, on average are "much higher-risk to be heavily indebted, revolve on their credit cards, experience delinquencies in traditional credit products, and use the high-interest financial products."
However, the CFPB report notes that the financial strain was evident for these consumers before the advent of BNPL. More research is needed to find out if buy-now, pay later "improves the financial condition of people in need or worsens the disparities ."
Recurring and Subscription Purchases
Since customers are keen to make a commitment to BNPL options, they might be disappointed to discover that they are incompatible with certain costs, like subscription services.
Buy nowand pay later services are short-term, interest-free installment loans. As with most loans, the buyer's eligibility, the terms and conditions need to be approved at the point of purchase. In this way, they may complicate pre-set recurring charges--such as that found in memberships and subscriptions.