Analyzing the rise of ‘Buy Now, Pay Later’ services
By now you might be familiar with the term “Buy Now, Pay Later” (commonly referred to as “BNPL”). Let’s explore some of the reasons for this trend.
So what is BNPL exactly?
“Buy Now, Pay Later” schemes are loan financing products which are somewhat similar to credit cards. Through partnerships with specific retailers, you can buy goods and services through installments (with APRs similar to mainstream credit cards / lines). These typically range from four bi-weekly payments to installments spread over 60 months.
It’s a fairly streamlined process: you don’t need to pull any physical “plastic”, enter your number, etc… Besides the convenience factor, most providers will only perform a “soft credit check” every time you make a purchase. Some retailers also run special offers such as 0% interest options if you pay the full balance within a relatively short period of time. This type of loan can be potentially interesting for consumers who either lack a conventional credit history or are not particularly interested in managing credit cards.
BNPL has been around for decades (I vividly remember my parents buying home appliances and electronics in the 80s and 90s through such means). As of July 2020, one third of U.S. consumers have used some form of BNPL service. Yet the…
