Buy Now Pay Later (BNPL) is a way to buy an item without paying for it all at once. Instead, the cost of the item is spread over several interest-free payments. Typically, stores that offer BNPL work with app companies that manage the transaction and installment payments. Many popular retailers and stores, both in-store and online, offer BNPL and the list of these is quickly growing.
The BNPL payment method typically appeals to those who don’t have access to a credit card or would like to avoid paying credit card interest. Many BNPL services don’t require a credit check for people to qualify, and most don’t charge fees for using their service – unless the buyer makes a late payment.
Payments in a BNPL structure are divided into monthly installments. Depending on the service’s options, this can be between three and 24 months. At checkout, shoppers select “buy now pay later” as the payment method. Then they must accept a list of terms and conditions before proceeding with the purchase. Payments are managed online through the provider’s website – usually allowing manual payments each month or automatic recurring payments from a customer’s bank account.
BNPL has advantages and disadvantages, as well as financial risks. These considerations are detailed in Maine Credit Union’s companion article. With careful budgeting and timely repayments, BNPL can prove beneficial. However, late fees can quickly add up, and buyers who do not read over all terms and conditions before committing to a provider’s BNPL can find themselves in financial difficulty. Always think carefully before committing to any financial arrangement – BNPL included!