Online shopping in the US has expanded rapidly over the years, touching a growth of almost 14.5% in 2021. Customers are now choosing, more than ever before, to pay through debit cards, credit cards, and online banking apps. Consequently, this has led to an increase in the usage of instalment payment methods like Affirm, Klarna, and Afterpay.
Undoubtedly, it is a relief to find out that you can purchase necessary items without the worry of making an upfront payment right away. Replacing the traditional payment methods quickly, the buy now pay later no credit check schemes provide an easy and flexible alternative to buyers who can choose to divide the bill into monthly instalments and pay later on.
As per the latest reports, the US alone accounts for 12% of online shopping being done through BNPL programs. This shows how inclined consumers are towards the purchase of goods and services through flexible payments. But here the question arises how will consumers know which stores are offering to buy now pay later and which additional stores allow for no credit check during such payments? That is the first basic trend that BNPL will likely focus on as shopping is shifting to online means and companies are now investing more than ever before in online marketing through sites and mobile applications.
To cash maximum benefit retailers are also pairing up with payment tools to launch special discounts and exclusive offers for the buyers. A prime example is that of Afterpay Day and Amazon’s Prime Day where retailers provided exclusive discounts to shoppers if they chose to pay with Afterpay and Amazon Pay respectively.
Buy now pay later schemes are expected to be highly successful in the future because they are already creating a pool of loyal customers thanks to additional rewards and incentives that they offer. The repeat customer then not only sticks to using the payment tool but also tends to explore more stores that accept the same payment method for convenient shopping. In this regard, Klarna has already become quite popular with a new reward program. It allows buyers to earn points on every dollar that they spend. Later on, the points can be redeemed in the form of a reward or discount at many retailers.
Typically, BNPL platforms offer customers to divide the payment into 4 equal instalments that are payable every month. However, recently, even more, flexible schemes have been launched which further drove the surge in popularity of such purchases and offerings. Don’t take our words for it! You can visit the Klarna website right now and check out the range of buy now, and pay later that are available to retailers. Ultimately, these are perfect schemes to drive revenue and eventually help retailers drive revenue.
Lastly, BNPL may not only be limited to online stores. Although that is what originated the digital growth of the schemes, brick and mortar have also made their payments more flexible now considering the success of such platforms online. It can be said without a doubt that the payment options will become more famous in the future for both online and in-store shopping.
As you can see, most of the trends mentioned here point toward the growing demand for buy now pay later schemes. As a buyer, you would have to stay ahead of your time and be aware of important information regarding these programs. Here’s a quick overview of things that you should know about.
- Buy now pay later financing schemes allow customers to buy something and pay for it later in an interest-free period of 4 or more instalments.
- The interest-free period may be limited to 15 days or be up to 45 days but there are only a few programs that allow for phases longer than this.
- Owing to its popularity, you can now purchase almost everything under BNPL programs such as clothes, accessories, electronics, furniture, etc.
- If you fail to pay within the time frame allotted to you, the retailers and the payment company will charge interest on subsequent payments as a penalty. You may also have to deal with hefty late payment charges.
- If you are using a payment forum that reports to credit bureaus, late repayment would eventually impact your credit score. This may make it difficult in the future to qualify for more buy now pay later schemes, get a loan, or be approved for a credit card.
Before jumping onto the bandwagon of excitement, it is also important to consider that BNPL is not free of shortcomings. Yes, it sounds very appealing to be able to divide the bills into segments and pay without interest charges but at the same time, such schemes can trick people into buying things they don’t need and eventually, overspending in the long run under the impression that they are able to “afford it”. Moreover, since your future credit standing largely depends on how punctually you can repay the loan, you will be taking a huge risk by buying costly items under the commitment of making a payment for the upcoming 4 to 5 months. This is a crucial point to consider especially for young borrowers who are yet to make credit history for future funding, loans, and credit cards. Therefore, before you make any future purchases, do pause to ask yourself, at what cost?
