BNPL: How it Works for the Consumer

Jeremy Cole

Finance:

BNPL: HOW IT WORKS FOR THE CONSUMER

BNPL IS DESIGNED AS A SHORT-TERM CREDIT SOLUTION. REPAYMENTS WILL USUALLY HAVE TO BE MADE WEEKLY OR FORTNIGHTLY AND THE REPAYMENT SCHEDULE WILL BE WEEKS RATHER THAN YEARS.

BNPL: How it Works for the Consumer BNPL stands for ‘buy now, pay later’ and refers to a form of credit allowing customers to spread the cost of larger purchases over several weeks or months. BNPL is a popular choice for many and can be a good way to access affordable credit.

Interest-Free Credit BNPL is typically an interest-free form of credit, which means that, although consumers are not getting a discount on their purchase, they are not paying any more than they would if they paid upfront. BNPL simply allows for the cost of the purchase to be spread out, which can help with cash flow. BNPL providers make their money from the retailer as a percentage of each sale made rather than from interest. However, if repayments are not made on time there could be late fees, which can increase the total amount repayable.

Short-Term Credit BNPL is designed as a short-term credit solution. Repayments will usually have to be made weekly or fortnightly and the repayment schedule will be weeks rather than years.

This might involve paying in instalments, or it could be that the customer is given a set period of time, such as 30 days, to pay the entire balance.

JEREMY COLE You can learn more about BNPL and other forms of embedded finance by visiting the blog of Jeremy Cole, Red Rose co-founder.