WHY BUY NOW PAY LATER IS SPREADING WIDELY?

Buy now, pay later (BNPL) loans offered by services like Affirm, Klarna, and Afterpay are exploding in popularity, and it’s easy to see why. As online shopping surged during the pandemic, so did the popularity of BNPL sponsorship. A new study from the Consumer Financial Protection Bureau (CFPB) shows that the number of BNPL loans issued by the five major lenders increased by 970% from 2019 to 2021. The loans are worth a staggering amount. is $24.1 billion in 2021, compared to $2 billion in 2019.

Although this solution brings many great benefits, it also has potential risks. Therefore, this article will help you have a more objective view of Buy Now Pay Later – the credit card alternative that is often hyped as the next big thing in online shopping.

What is Buy Now Pay Later?

Buy Now, Pay Later (BNPL) is a type of short-term financing that allows consumers to make purchases and pay them off gradually without interest. Using BNPL financing can be convenient for consumers, but there are some potential downsides to consider.

BNPL agreements, also known as point of sale installment loans, are an increasingly popular payment option, especially for online shopping. Learn how these apps work and about their advantages and risks.

How Buy Now Pay Later works

With BNPL, you can shop at a participating retailer and choose to buy now, pay after checkout. If approved, you make a small payment, such as 25% of the total purchase. You then pay off the remainder in a series of interest-free installments, usually over several weeks or months. Payments can also be automatically deducted from your debit card, bank account or credit card. Other payment options may include checks or wire transfers.

BNPL applications typically charge no interest or fees and they have a fixed repayment schedule. You will know your payment amount in advance, and each payment will be the same.

In general, clients do not pay extra money when they use a purchase now, pay later payment options. Also, while using a purchase now, pay later service, the price of a product or service does not alter. If a product is priced at $100, the client will still pay $100 to the company that makes the transaction. Yet, businesses who opt to provide a buy now, pay later service may incur processing fees. The price of a purchase now, pay later service will vary depending on the supplier.

Benefits of Buy Now Pay Later for businesses

Buy now and pay later Most businesses benefit from payment methods, particularly:

• Shops who sell high-value products and services, such as luxury merchandise or airline tickets, and aim to increase conversion
• Retailers providing low-value items and services that want to improve average cart size and attract new consumers who may not have credit cards or the financial wherewithal to pay the entire amount up front.

Having said that, purchase now, pay later services may not be a suitable fit for your company if:

• It reaches a larger audience. Buy Now, Pay Later has grown in popularity among younger generations, particularly millennials and Generation Z. Whether it’s due to rising living costs, fewer salaries, or a lack of time to save. In any case, they adore it.

Thus, if you’re deliberately attempting to attract a younger audience with your products, chances are they won’t buy if you don’t provide BNPL as a payment option.

Aside from reaching a younger audience, giving Buy Now Pay Later as a payment option helps you to reach out to audiences that would not ordinarily buy from you owing to economic constraints.

• Your company is based on subscriptions or recurrent transactions. Invoicing and subscriptions are not presently supported via buy now, pay later options.

Top Buy Now Pay Later companies 

Partnering with BNPL organizations with established reputations will take some of the uncertainty out of the equation for you and your clients. The following are the top seven.

Affirm

Affirm, which was founded in 2012, is accessible in the United States at over 29,000 shops and has funded over 17 million transactions. Active customer base to 11 million global customers.

Interest rates: range from 0% to 30%, depending on the payment plan and user eligibility.

Loan duration: six weeks, six months, or a year

There are no fees.

Credit limit: $17,500

Afterpay

Afterpay debuted in Australia in 2014 before extending to the United States, New Zealand, and the United Kingdom. Presently, 122,000 brands, including 23,000 shops in the United States, use Afterpay to reach over 19 million customers.

There is no interest.

Loan duration: six weeks

Fees: Late or missing payments might result in costs of up to 25% of the purchase price.

The credit line begins at $500.

PayPal Pay In 4

PayPal is a well-known online payment processing platform. It also provides BNPL access to millions of online merchants as of August 2020. This is a familiar brand name with its ease of use, security and performs a mild credit check on the user

There is no interest.

Loan duration: six weeks

There are no fees.

$1,500 credit line per transaction

Klarna

One of the most well-known BNPL firms is Klarna. It was created in 2005 by Stockholm School of Economics students and is currently available in more countries than its competitors. Active customer base to 147 million global customers.

Interest: None for the Pay Later in 30 Days and Pay in 4 options; monthly financing ranges from 0% to 19.99%.

Loan terms are available for 30 days, six weeks, and up to 36 months (monthly financing)

Fees: There are $7 late fees for missed payments on the Pay in 4 plan, and up to $27 for returned payments on the Pay Later in 30 Days plan.

Line of credit: Pay Later in 30 Days and Pay in 4 plans each cost $1,000; monthly financing choices cost $10,000.

Our preferred Buy Now Pay Later providers

PayPal Pay in 4 is a service that is quite self-explanatory. It’s a “Buy Now, Pay Later” (BNPL) service that lets customers pay for products in four convenient payments rather than everything at once.

Additionally, owing to PayPal’s popularity, the option is widely accepted all over the Internet and in many retail places. With no fees and interest, we think PayPal Pay in 4 will be suitable for your business.

In conclusion, BNPL loans allow you to make quick purchases while repaying them over time with no interest. Compare the benefits and drawbacks of this financing option to alternatives such as credit cards and personal loans. If you’re thinking about utilizing a BNPL app, be sure you fully understand the terms and conditions and can make all payments on time. Evaluate if the payments are affordable and what penalties you could face if you can’t make them. Years in the business, CorpAgent believes that nothing but expertise, experience, valuable partnerships, and transparency make a professional stand out from the others.

CorpAgent is proficient in its area. But more so, we have 10 years+ in the business and a strong bond with PayPal Hong Kong. We have helped thousands of foreign businesses start with PayPal Business and PayPal Pay in 4, and we look forward to helping more as we develop more insights and form a stronger bond with PayPal Hong Kong (and PayPal Singapore, for those who are interested), we are confident that our service quality is unmatched especially in the SEA/APAC region.

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