Most of you are familiar with the concept of credit cards. But these cards are not accessible to the most of the people of our country. Thus they could not enjoy the benefits of the credit card. But nowadays various e commerce platforms like Amazon, Paytm introduced a new concept of Buy Now Pay Later option for their customers.
Concept
In this article we will try to clear the concept of the model. We will explain how this model will generate more income to those companies. After discussing the goods and bad sides of this model We will also discuss if you should opt for this option or not in the end of the video.
How it Works
Let us understand first how the buy now pay later (BNPL) option works. We can purchase anything in the e commerce site at any time without immediate payment. After buying you can payback it after a month or even in EMI option. In case of EMI, there are sometimes charge include in it and sometime it is without any charges.
Using this method people tend to think they can afford the things which are not even adjustable with their budget. By these companies and retailers get benefit as more transaction occurs.
Differences with Credit Cards
This BNPL system is clearer and more transparent than credit cards. There are no hidden charges. Consumers get the idea about the payment amount. It is also accessible for everyone whereas bank checks cibil score, credit score and many other things before giving credit cards. If you iss your credit card bills, bank may charge upto 50 percent whereas in BNPL it will be highest 24 percent which is also a good thing.
Positive sides
No doubt this BNPL Helps both the customer and vendors. Suppose you need some essentials now but you don’t have money now but you know you can pay it later, so easily you can choose this option to buy the products. At the same time vendor also get benefitted as the purchasing power of the customer increases.
BNPL also provide flexibility in the payment system. You can easily opt for the option whenever you want without any problems. In fact, now this companies offering are some benefits for opting the BNPL system. Some of them even giving reward points for paying the money in time.
Negative sides
Now lets discuss about the negative sides of this BNPL. This is almost the same like credit cards. When a financially illiterate or debt loving people get the options like credit card or BNPL they usually spend a lot. But when it was time to payback they failed to cop up. Thus their debt file increases. They lost their valuable cibil and credit scores which may hinder to get any loan further.
Final words
At last we want to conclude that this Buy now Pay Later option is good if carefully used. People who don’t have the credit cards they can increase their cibil score by paying due money in BNPL. It will be helpful for them to get more loans in future. At the same time we suggest the attractive features of this BNPL should not overspend in anything we can`t afford otherwise we may get in Debt trap.