how do companies make money using buy now pay later scheme?
how buy now pay later works?
in this video we discussed about the future of buy now pay later policies and also pointing the future of it's users financial condition.
Buy Now, Pay Later (BNPL) is a type of short-term financing that allows consumers to make purchases and pay for them at a future date, often interest-free. Also referred to as "point of sale installment loans," BNPL arrangements are becoming an increasingly popular payment option, especially when shopping online.
Buy now, pay later programs aren't all exactly the same. Each company has its own terms and conditions, but generally, point of sale installment loans operate along the following lines:
You make a purchase at a participating retailer and opt for buy now, pay later at checkout.
If approved (you're told in seconds), you make a small down payment, such as 25% of the overall purchase amount.
You then pay off the remaining amount due in a series of interest-free installments.
You can pay via a check or bank transfer; payments can also be deducted from your debit card, bank account, or credit card automatically.
Although they both involve delayed payments, BNPL is different from making a purchase with a credit card. When you use a credit card to pay for things, you're only required to make the minimum payment due on the card each month. Interest accrues on the remaining amount (unless you've used a card with a 0% introductory APR) until you pay it off in full. But you can carry a balance indefinitely.
In contrast, BNPL arrangements often don't charge interest or fees. But they have a fixed repayment schedule—generally several weeks or months. You're told upfront what you'll need to pay each time, and it's usually the same amount. It's comparable to any other sort of unsecured personal or consumer loan.
Not all purchases may be eligible for buy now, pay later financing. And there may be limits on the amount you can finance this way. But buy now, pay later can be an attractive way to pay for smaller purchases when shopping online, and its popularity grew during 2020, with the rise of e-commerce in general.
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