What Is Buy Now, Pay Later, and How Does It Work?

 What Is Buy Now, Pay Later, and How Does It Work?

If you are someone who has been shopping online, you must have seen the option of buy now, pay later (BNPL) in the check-out step of many e-commerce apps, such as food delivery, travel booking, lifestyle, pharmacy, and grocery.

The post highlights details about this concept. So, without any ado, let’s see what is buy now, pay later and its process.

What is Buy Now, Pay Later?

As it is evident from the name itself, customers, with the ‘buy now pay later’ option, can make a purchase without having to pay at that moment. It is a kind of small-ticket loan that acts as a short-term financing option through which customers can purchase products and then repay within a stipulated time frame.

In general, customers use this option to either make payment in a lump sum for their purchases or through no-cost EMIs. This feature encourages buyers to purchase items and pay for them over time which increases their purchasing power and motivates them to borrow short time financial aid to help with a purchase.

How Does It Work?

The option of ‘buy now, pay later’ appears on the checkout page where customers can see the break-up of their total purchase amount and pay none or a smaller amount, instead of the full amount. Besides, they get to choose from the given tenure over which they would like to make payments in the form of equated monthly instalments (EMIs).

For example, there is a 25-year-old person who wants to buy a laptop worth Rs. 50, 000/-. Now, with the buy now and paylater option, he can buy it with a small amount and choose to repay the remaining balance over the chosen time frame.

This model works for small and big purchases, like right from ordering food to buying expensive gadgets.

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