BNPL: Buy Now or Buy Not?

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Purchase something today and then pay the bill when the month ends.. What’s so new about it? Isn’t that what we do with our monthly doodh ka bill? NOPE

Buy Now Pay Later is a form of short-term financing which lets users pay in EMIs or instalments at the end of the mentioned time period after making certain purchases. It is a fairly new concept in India and gaining pace quickly in the economy as who wouldn’t prefer buying their favourite goods now and paying later for them?

WHAT IS IT EXACTLY? (A PROPER UNDERSTANDING OF BNPL)

It is a financing option wherein you can make purchases without having to worry about the payment then and there. The payment will be made by the facilitator company that you sign up with, to whom you will have to then repay the amount in lump sum at one point in the future or as no cost EMIs.

However, if you fail to pay the amount, you will then be charged an interest on the payment by your lender and delaying is only going to damage your credit score.

WHATCHIT DO? (How does it work?)

Zero interest BNPL offers between Rs. 1,500 to Rs. 25,000, which is usually meant for smaller and more frequent/essential transactions. With interest the BNPL model offers Rs.25,000 to Rs. 1,00,000+ as credit, meant for bigger more valuable transactions. The repayment can be done within one to three months or even within twelve months in some cases. These credit or rather loan offers are brought to you by tie ups between the retail marketplaces, merchants and financiers.

In most cases you will be charged interest, similar to that of a credit card, but here you will have the grace of “interest-free” periods, within which if you pay off your balance you will be not be charged any interest. For example, you make a purchase of Rs. 20,000, your BNPL payment option would be something like Rs. 2000 per week for 10 weeks. Failing to pay within the interest free period will lead to a big late fees and interest charges.

The Pros

1. Upfront purchases and payments in instalments

2. Payments usually have little to no interest rates

3. Increase in sales and repeat purchases with the help of BNP

4. Interest free periods to facilitate comfortable payments that fit your budget

5. User friendly apps

The Cons

1. Impulse purchases might be tough to repay later (Credit card users, this one’s for you too)

2. Missing a payment will burden you with high interest rates

3. Too many BNPL plans can lead to confusion and difficulty in choosing the right plan

Credit Cards VS BNPL

While credit cards are universally accepted and give more credit than BNPL providers, it is no doubt that the BNPL platforms are more convenient and user friendly than credit card payments and even the sign-up procedures.

BNPL is also a better option when it comes to interest rates. No interest is charged under BNPL unless you opt for a longer duration of repayment that exceeds the interest free period. Whereas, the sky-high credit card interest rates are no secret from anyone.

Both credit cards and BNPL providers come with and without the various fees. For example, depending on the credit card in question, you will have to pay charges like joining fee, annual fee etc., same as the BNPL providers, which, if bank-led do not charge a processing fee, which other players do charge.

All that said, if you’re the kind that craves them airport lounge accesses, the 10x rewards, and the sky high credit limits, BNPL ain’t going to fit the bill.

For those of you who aren’t still sure which one to go for, head over to maxxed and let us make your life easier!

Are you the chosen one? (Eligibility criteria for BNPL)

You are very much the chosen one if you fit the following criteria:

1. You are an Indian residing citizen

2. You are at least 21 years old

3. You have a bank account and hold a regular monthly income

4. You have a valid PAN and Aadhar number linked to your bank account.

BNPL providers in India

Here’s a list of the top BNPL providers in India;

1. ZestMoney

2. Slice

3. LazyPay

4. Amazon Pay Later

5. Ola Money Postpaid

6. Paytm Postpaid

7. Simpl

8. Flexmoney

Of course, we’d love for you to sign up with Maxxed so you don’t have to worry about which payment method to use or buy, ever.

Closing notes

BNPL as an up-and-coming form of payment has a lot of scope in an economy like India wherein “Udhaari” is an age-old concept everyone is familiar with. The problem here is that however convenient it may be, it is still a loan at the end of the day which needs to be repaid. The lenders need to keep in mind that not every customer will be capable of meeting with timely payments and the customers need to be made aware of the consequences of late payments. To sum it up, BNPL is a brilliant form of transactions for those who are well aware of it.