buy now pay later poster

What is Buy Now, Pay Later (BNPL)?

If you heard of the phrase Buy Now, Pay Later or BNPL somewhere and wondered what it was, then you’ve landed on the right page.

Buy Now, Pay Later (BNPL) simply said is a modern payment solution that allows consumers to make purchases and pay for them in installments over time. 

Being a Gen Z myself, I know how quickly your eye catches a certain product online. But the immediate thought that comes after it is the finance needed for it.

That’s when Buy Now, Pay Later comes into play.

How Buy Now Pay Later (BNPL) works?

The process is simple; consumers can buy products immediately and choose to pay for them in installments. With BNPL, consumers can pay for their product without spending money from their bank accounts. Consumers have the option to pay the total amount due all at once or the minimum amount due in installments, for which they will not be charged with interest. But, if the consumer fails to pay the minimum amount within the due date, interest will be charged in the unpaid amount.

Suppose, you take a credit of Rs. 20,000 and choose to pay Rs. 5000 every month, it will take 4 months to pay back the initial amount of Rs. 20,000 without any interest. But, if you fail to pay the payable amount in 4th month and can only pay Rs. 3,000, interest will be charged on the remaining amount i.e., Rs. 2,000.

In case of excess amount lying in your account due to additional repayment or a refund, this amount can be adjusted against future pending dues, or it can be refunded to consumers as per their request.

With BNPL, consumers do not have to pay interest on the installments of the purchase. Unlike traditional loans, BNPL doesn’t involve lengthy credit checks or complex application processes. This allows consumers to purchase their desired products immediately while spreading the cost over installment payments, making the product they purchased more economical. The BNPL system provides consumers flexibility and convenience in paying.

Buy Now Pay Later (BNPL) vs Equated Monthly Instalment (EMI)

Approval Process and Accessibility:


  • Pros: BNPL services often has a quick and straightforward approval process, making them accessible to a broad range of consumers.
  • Cons: The ease of approval might mean that consumers could find themselves committing to payments without a thorough understanding of their financial capacity.


  • Pros: While EMI transactions may involve a more careful credit check, they can provide a structured and stable financing option for those with good credit scores.
  • Cons: The strict credit checks could exclude individuals with lower credit scores, limiting accessibility.

Interest Considerations:


  • Pros: Many BNPL services offer interest-free periods, providing a window for users to pay off their purchases without incurring additional charges.
  • Cons: If the payment extends beyond the interest-free period, some BNPL plans may apply interest charges, impacting the overall cost of the purchase.


  • Pros: EMI transactions offer predictability with fixed monthly payments, allowing consumers to plan their budgets more effectively.
  • Cons: Unlike BNPL, EMI almost always involves interest charges, contributing to the total cost of the purchase.

Payment Structure and Duration:


  • Pros: BNPL services often provide flexibility in payment schedules, allowing users to choose shorter or longer repayment periods based on their preferences.
  • Cons: Extended payment periods may result in higher overall costs due to potential interest charges.


  • Pros: EMI transactions come with a structured payment plan, ensuring that consumers repay a fixed amount each month until the total amount is settled.
  • Cons: The fixed nature of EMI payments may be less flexible for those seeking varied payment schedules.

Retailer Acceptance:


  • Pros: BNPL services are widely accepted across various online and offline retailers, offering consumers a broad array of choices.
  • Cons: The popularity of BNPL could lead to overspending as users might be tempted to make impulsive purchases.


  • Pros: EMI, often associated with credit cards, has widespread acceptance, making it a viable option for a variety of purchases.
  • Cons: Some retailers may not offer EMI options, limiting choices for consumers.

Long-Term Financial Implications:


  • Pros: BNPL can be a convenient short-term financing solution, especially with interest-free periods.
  • Cons: Extended use of BNPL without careful planning may lead to accumulating interest and potentially impacting long-term financial health.


  • Pros: EMI provides a structured approach, helping in long-term financial planning.
  • Cons: The accumulation of interest over the repayment period could result in higher overall costs.
buy now pay later

Facilities that Buy Now Pay Later (BNPL) Provides

Financial Flexibility:

BNPL services offer financial flexibility by allowing consumers to make purchases and spread the cost over time. This flexibility is extremely helpful for individuals who may not have the upfront funds to make a significant purchase. With BNPL, you can enjoy the latest products and pay in manageable installments.

No Interest:

Unlike traditional credit cards, many Buy Now Pay Later services provide zero-interest financing, making it an attractive option for budget-conscious shoppers. By understanding the terms and conditions of each BNPL provider, consumers can strategically choose options that align with their financial goals without incurring additional interest charges.

Instant Approval and Easy Application:

The BNPL application process is usually straightforward and quick, offering instant approval for eligible consumers. With just a few clicks, users can apply for BNPL services, enhancing the overall shopping experience by eliminating the hassle associated with lengthy credit checks and approval delays.

Enhanced Shopping Experience:

Buy Now Pay Later services are integrated easily into the online shopping experience, allowing users to make quick and easy transactions without disrupting their journey. This convenience not only attracts customers but also encourages repeat business as consumers appreciate the organized process.

Risk Mitigation for Merchants:

From the perspective of online retailers, BNPL services help mitigate the risk of dropped checkout. By providing customers with a flexible payment option, merchants can reduce the likelihood of potential buyers abandoning their carts due to financial constraints. This leads to increased sales and improved conversion rates.

Budget-Friendly Repayment Plans:

BNPL services typically offer transparent and budget-friendly repayment plans, allowing consumers to manage their finances effectively. By knowing the exact amount and due dates of each installment, individuals can plan their budgets with confidence, avoiding surprises and late fees.

Credit Score Impact:

For those looking to build or maintain their credit score, BNPL services can be a strategic tool. Responsible and timely repayment of BNPL installments may positively influence credit scores, providing users with an additional incentive to utilize these services for their financial transactions.

Also Read: How to Apply for Financial Aid in Coursera


What is the minimum age for using BNPL services?

Most BNPL providers require users to be at least 18 years old to access their services.

How does BNPL impact my credit score?

While BNPL usage itself may not directly affect your credit score, late payments or defaulting on payments can have a negative impact.

Are there hidden fees with BNPL?

It’s essential to review the terms and conditions of each BNPL platform to understand any potential fees, such as late payment fees or interest charges.

Can I return items purchased through BNPL?

Return policies vary among BNPL providers, so it’s advisable to check the specific terms of the platform you used.

Is BNPL available internationally?

Yes, many BNPL services operate internationally, but availability may vary by region. Check with the specific BNPL provider for details.

Also Read: 6 Steps to Become a Digital Marketer

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