Buy now, pay later is a simple concept: instead of buyers paying at the till or online checkout, the BNPL provider pays the retailer for the buyer. The buyer then agrees to pay the BNPL provider back over a few weeks or months, meaning the buyer can spread out buyer shopping costs. It simply means that buyer has got longer to pay off the full cost of her/his everyday purchases, which might help with cash flow. Such a proposition cancels credit card fees out of the equation. Consumers are looking for more flexible and responsible methods to pay online. With this transformation, Buy now, pay later (BNPL) options like Klarna, Clearpay are sweeping over the globe.

The impact of the coronavirus (Covid-19) pandemic has accelerated the rate of adoption of pay over-time options, significantly simultaneously changing business models and new developments in unregulated buy now pay later (BNPL) unsecured lending.

Such easy access to credit, which can be granted in minutes, has made BNPL a popular option with the UK & global shoppers. Managed correctly – by ensuring buyer never miss a payment, which normally incurs a fee – BNPL can be used as a totally FREE way to borrow.

This comes as no surprise when the buyer consider how younger generations are hesitant to use credit cards. According to a new study on buy now, pay later apps done by The Ascent, 67% of millennials don’t have a credit card. For some, that’s because they can’t get approved, and others prefer to avoid credit. Many don’t think it makes sense to use a credit card for small, everyday purchases and are worried about the impact of credit cards on their credit scores. And while BNPL is popular with younger generations, it’s growing in popularity with people of all ages.

When the buyer buys something using BNPL, buyer won’t be subject to a ‘hard’ credit check – one that would leave a ‘footprint’ on the buyer’s credit file. If that would be a traditional loan, it’s more likely a hard credit check would be involved and leave negative ‘footprint’. If managed incorrectly.

So, what are the benefits of spreading the costs?

1. With buy now, pay later you’re SPREADING the cost of what you buy over weeks or months
2. It’s interest and fee-free.
3. BNPL can be used in-store as well as online
4. You won’t be ‘hard’ credit checked when using BNPL
5. BNPL buyers no longer have to wait for refunds to be returned to their bank account

Is JO1N of any help?
As millions of individuals have been affected financially as a result of the unprecedented times, we focus on affordability for our buyers and eliminate frictions at the checkout for our merchants. Promoting responsible lending values, we want to ensure that our customers can afford to repay deferred purchases and enter into either interest-free or interest-bearing agreements.

JO1N us and get smarter with your personal finance!