What Is Buy Now, Pay Later (BNPL)? How does it work?
First created decades ago, the concept of Buy Now Pay Later (BNPL) is the idea of consuming goods and services first and then paying post-consumption. It is not something new in society– in fact, it has been trending for years at local restaurants and eateries. Shopkeepers or owners practice this in a form of a ledger entry for every individual that would buy things and then collect the compensation at the end of every month. For this, the payee would diligently record all the purchases and send over the details. Individuals can tally them and return products that are not relevant while paying for the rest.
But one question that comes to mind is how it works on a larger scale and does the payee lose money on the interest by not getting the money immediately?
Before we move on to answer this question. Let us check a few quick facts.
Almost 10 percent of eCommerce transactions in Australia are paid using BNPL.
BNPL proved to be the fastest-adopted payment method in India and UK in 2020.
More than half of US customers prefer to use BNPL services.
It is estimated that BNPL will account for 12 percent of total global eCommerce spending by 2025.
Well, the facts show that BNPL is quite popular among customers across various countries. So what exactly is BNPL?
Buy Now Pay Later abbreviated as BNPL is an alternative digital payment method that permits customers to purchase goods and services without committing to the full payment upfront. By doing so, customers will get the leverage to immediately finance their purchases and pay them back in fixed installments over time. For example, a customer making a $1000 purchase gets the leverage of paying back in say four interest-free installments of $250.
These services are widely used by businesses, especially eCommerce retailers in order to increase conversion, and average order value while also reaching new customers. It is reported that businesses that use BNPL services have a 27 percent incremental uplift in sales volumes.
For more: https://fintecbuzz.com/what-is-buy-now-pay-later-bnpl-how-does-it-work/
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