If you regularly shop online you will be aware of the many ‘Buy Now Pay Later’ schemes on offer. BNPL options simply provide consumers with the option to pay for their items 30 days after purchasing or in installments. The unique benefit to this form of finance is that it is interest-free.
According to research from Which?, the consumer body, the amount of e-commerce platforms interesting BNPL options into their websites is on the rise, especially in the lead up to the festive season.
Why the upward trend?
BNPL has largely been adopted by cash-strapped youths that want to buy goods and spread the cost over a number of pay packets. It is mostly used on clothing, with retail giants such as Boohoo and ASOS being big advocates of such schemes. Indeed, the pandemic has had a bearing on the popularity of BNPL too. With everyone tightening their belts, consumers have understandably been looking for ways to buy the things they need and want in an affordable fashion.
What’s the catch?
While a 0% finance option seems like a no-brainier, if payments are not met on time, there are inevitably fees. This is something Which? suggests is not communicated clearly enough to shoppers. In a recent survey of the top 11 UK shopping portals, it found that half of companies were not displaying terms correctly. This is why any e-commerce business owner considering partnering with a BNPL provider like Klarna should take steps to educate customers on both the benefits and fees involved in taking this line of credit.
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