Buy Now Pay Later Report: Market Trends in the eCommerce Financing, Consumer Credit, and BNPL Industry

Millennials and Generation Z are becoming more money savvy in order to better manage their debts and spending. Buy Now Pay Later (BNPL) has attracted a rising segment of youthful demographic clients, thanks to its basic concepts of customer-centricity, cost efficiency, and credit transparency.

BNPL is a fast-growing purchasing option that allows customers to put off paying for products until the completion of the billing cycle. For payments paid within the credit period, the short-term funding option divides repayments into flexible instalments, which are usually interest-free.

Buyers can make payments with varied credit durations, ranging from a month to a year, depending on the service provider’s policies.

However, depending on whether the offer is interest-free or with interest, BNPL credit limitations differ. Zero-interest BNPL offerings are normally between Rs 1,500 and Rs 25,000, and are primarily intended for small-value transactions, such as necessities and frequent purchases.

‘With-interest’ The credit offered by BNPL ranges from Rs 25,000 to Rs 100,000+, and is intended for high-value purchases. The essential intent in such circumstances is formed by the credit amount granted, as well as the convenience factor. The payback period for goods purchased using interest-based EMIs ranges from one to three months, and in some cases, up to a year.

Growth possibilities

Majority of customers use credit cards, BNPL has a huge opportunity to capitalise on the credit market’s untapped potential.

Members in the BNPL are ideally positioned to fill this hole, as the country’s low credit card usage is due to concerns about high-interest rates and hidden costs.

A few major banks have also entered the market, recognising its growing popularity. Interestingly, BNPL provides a generous credit limit of Rs 100,000 or close to it, whereas credit card caps might reach many lakhs. Clearly, each product has a specialty and certain customer groupings.

Banks have started pushing BNPL products to customers who prefer not to use credit cards because of the hefty penalty fees and yearly fees.

They’re partnering with payment behemoths to provide retail shoppers pay-later options within stores. Consumers can use this to make high-value transactions and pay for them in regular EMIs.

In the midst of the COVID-19 pandemic, the BNPL option has allowed consumers additional buying options without the high-interest rates that come with credit cards.

Millions of individuals were pushed to embrace digital purchasing options by the COVID-19-led lockdowns. It was many people’s first experience with electronic payments. Merchants and users have shown trust in BNPL, and the feedback has been favourable.

Buy now pay later shopify have been introduced in the BNPL industry to provide customers with more flexible payment choices. BNPL solutions, unlike credit cards, are applied to individual transactions, making them acceptable to consumers who want to make a smaller financial commitment, even on lower cost items.

Although some BNPL solutions are available in stores, they are more generally available when shopping online because they are native to ecommerce checkout. With ecommerce sales expected to increase by 44.4 percent year over year in 2020, more shoppers may opt to use Buy now pay later guaranteed approval solution on a more frequent basis if they haven’t previously.

Major Types of BNPL

• Providers who give direct services

Direct suppliers are at the forefront of the rise of BNPL solutions in the United States, and they are in the best position to profit from the industry’s growth. They are the businesses most responsible for the industry’s expanding profile through selling BNPL items at the point-of-sale (POS).

• Facilitators

Facilitators are large payment businesses with extensive merchant relationships who want to take advantage of the growing interest in direct provider solutions. They make it possible for their merchant networks to offer direct suppliers’ BNPL solutions, allowing them to join the BNPL environment.

• Retroactive Providers

Buyers can use retroactive providers to get financing for any purchases made with their credit card after they’ve made them. After transactions have been made, these credit providers, mostly issuers, provide various payment choices.

The Benefits of Buy Now, Pay Later

Purchase now and pay later Consumers can use finance agreements to pay for items over time without incurring interest charges. Even if you’ve been turned down for other loans owing to a poor credit score, you may be eligible for this sort of financing. Credit card debt is not added to by BNPL loans, but personal loan debt is. They don’t normally have an impact on your credit score because they’re usually too short to be recorded to the credit agencies.

Acquiring them and paying them off, on the other hand, does not help you create and build good credit.  You also lose out on any benefits offered by credit cards, including cash back or loyalty points.

Advantages

• It’s a convenient and disciplined way to pay for things over time.

• Frequently have a cheaper interest rate than credit cards.

• It is not necessary to have good credit or a high credit score to qualify.

• Acceptance in a timely manner

Conclusion

The concept behind buys now, pay later is that customers can receive what they need right away while still receiving some extra time to pay for it.

Purchase now and pay later If you can’t or don’t want to pay for something all at once, financing may sound enticing. These mortgages stretch your credit without charging high interest rates, but they come with a repayment schedule so you don’t end up with a mound of unpaid debt. However, think as to whether the repayments are affordable and what penalties you might face if you can’t make them. Millions of people are turning to digital funding as a result of the coronavirus pandemic’s economic consequences, and there are already hints that certain companies may outcompete others and gain market share. Customers’ needs will expand in tandem with the growth of ecommerce.

The Buy Now Pay Later study from Insider Intelligence covers important BNPL players, market trends, and business strategies that are leading the way and will most likely win in the US.