How Consumers Can Benefit From the ‘Buy Now Pay Later’ service?

Cropped shot of a woman using a smartphone while relaxing on the sofa at home

While business likely refresh resilience plans in response to the COVID-19 pandemic, many are embracing Buy Now Pay Later (BNPL) payment options. As consumers are more carefully evaluating the importance of each purchase, many are gravitating toward merchants that offer flexibility.

 

BNPL or shop now, pay later, is becoming increasingly popular for consumers seeking the balance between managing tight budgets and the need to immediately acquire all the basic necessities of everyday life. It is an alternative payment method that embodies both flexibility and control by enabling consumers to get the products they want first and submit payment later.

 

 

BNPL Joins the Alternative Payment Method Evolution

A report by Worldpay from FIS indicates that BNPL is one of two digital payment methods expected to gain global market share between 2021 and 2023, with the other being digital and mobile wallets. 

 

The Global Payments Report 2020 released in January last year notes that across Asia-Pacific, e-commerce transactions using BNPL are expected to more than double during the corresponding period.

 

Even though BNPL has been labeled as a solution for people who live paycheck to paycheck, a  series of consumer research by Capco has identified that it is in fact simply a great solution for the budget conscious consumers.

 

Consumers are becoming increasingly digital in the way they shop, leading the BNPL service to grown in importance and popularity due to these crucial factors: convenience and transparency.

 

Here’s a glance at some of the benefits of BNPL for consumers:

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a. Extra Convenience

myIOU accepts credit and debit card payments, adding extra options and convenience for the consumers. Payment will be automatically debited from your card every month based on chosen repayment plan upon checkout.

b. Ease of Use

Some BNPL platforms provide a QR-code option that allows you to make a payment for your purchase by just scanning the code accessible at both online and in-store merchants.

c. Safety and Security

Consumers may use BNPL to make safe payments without having to swipe their card or enter their PIN, or enter their net banking information or transfer money from an e-wallet. All that is required is for an OTP to be produced and sent to their registered mobile phone.

 

d. Maximising the BNPL option to your advantage

Aside from the convenience and flexibility that BNPL offers, this credit option may also help you develop a good credit rating if you keep your half of the bargain with the service provider or merchant and pay your bills on time.

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Here are three tips that could help you, as a consumer to use BNPL payment option smartly:

1. Monitor your BNPL transactions

You know your finances, credit commitments, and other responsibilities, so be cautious and keep track of your BNPL transactions.

 

Even if you stay within your permitted credit limit, overspending might make it harder to repay your debts responsibly.

2. Choose your repayment tenure smartly

The repayment tenure provided by BNPL service providers are fairly flexible with options up to 6 payments. Paying by instalments enables you to plan your budget better for the next few months by taking into account what you need to put away for your BNPL payments and recurring bills.


So, choose your repayment tenure smartly as it gives you a clearer idea of what your monthly budget looks like ahead.

3. Don’t miss your monthly payments

Missed payments may result in a late payment fees being charged to your account. They could also be recorded on your credit report and affect your credit score.

 

It is crucial to maintain financial discipline when making your repayments, just as it is with other credit options. So, make sure you set calendar reminders and alerts to help you stay on top of your bills and pay them on time.

In a Nutshell

While Buy Now Pay Later is an attractive proposition for consumers, it is crucial not to get carried away. Maintain financial and credit discipline to get the most of this credit option.

 

In short, with good financial knowledge and self-discipline, shoppers can greatly benefit significantly from the BNPL solution, especially during this challenging time.