The buy now pay later app has become the best shopping tool and is still growing in popularity to become one of the highest grossing payment channels at $ 50 billion all over India by 2026. This option has caught the fancy of the younger generation, and already 35 to 40% of all buy now pay later transactions are by people upto the age of 35 years of age. Many buy now pay later stores allow buyers to pay 20 to 25% of the value of the total goods purchased in a shopping cart and pay later in several EMI's (equal monthly installments) spread over one to six months.
Even merchants and owners of buy now pay later online stores are happy for the added business and increased sales coming their way, and they do not even have to face the risks of delayed payments or collecting EMIs. What's more, they get free markets from the entire customer base of a buy now pay later app that they have subscribed to. They also get featured in the shopping lists and search engines integrated with every buy now pay later app. The online stores get free publicity without having to go for sales promotions or advertisements. There is a further benefit for merchants in the form of new customer acquisition incentives, and stores, as well as business owners, get all the benefits and POS (point of sales) being overworked with transactions and sales around the clock.
A boon or a bane?
The scenario of buy now pay later seems like a win-win situation. Everything appears affordable if the pricing structure is tailor-made to monthly budgets, incomes, and salaries. Here is a limited-time credit facility with hardly any interest charges, and penalties on delayed payments work out still lesser than credit card interest rates on delayed payments.
Pay later is a magic word that sounds like music to the ears, but debt is a debt that has to be paid back. Most Indian families work on a monthly budget where there are expenses for children's education, house running costs, EMIs for homes and automobile loans, premia for life insurance, and health insurance. The limited money that is left over goes into unexpected and emergency expenditures. Surveys have shown that 40 to 50% of people reveal they have spent more ever since they have been using the buy now pay later facility.
So it is necessary to look at the benefits of using the buy now pay later facility.
It eases out the payment schedule over a period of a few months, giving people more breathing space.
The buy now pay later app provides a safety cushion for payment of essential things that people would ordinarily have to do without due to the non-availability of ready cash or having to go for a loan.
Incentives such as loyalty rewards, cashbacks, and discounts are a mode of saving besides savings on little to no interest costs.
Sophisticated buy now pay later apps provide more affordable repayment schedules for high-value items and essential security in the form of healthcare packages that are necessary for the household. Many families cannot afford these until a much later stage. BNPLs help people purchase these facilities.
There are, however, some schools of thought that the buy now pay later facility is a bane. Some people feel that they are overspending with the buy now pay later facility. It is upto users to not let themselves be carried away and use this facility to get themselves things and items that are useful and required instead of just wasteful spending just because there is a readily available credit facility. Buy now pay later is a blessing for getting items that are really needed, and the longer interest-free payment options for expensive items can be a blessing in itself.
This does not mean that the buy now pay later facility is bad or a bane.
People need to manage their expenditures and live within their means. No amount of credit schemes or loans can compensate for overspending.
People need to plan out their monthly budgets, decide on what to purchase, and phase out purchases to make each purchase after the previous purchase has been paid in full. People also need to prioritize what they need the most and acquire goods and facilities one by one.
So this is a blessing in disguise
Buy now pay later is a very convenient way of balancing out expenditure and being able to afford high-cost but necessary items. The opportunity of getting a payment phased out over a year can be very useful. Credit-conscious people can even pay for a service or a package in advance installments before even using it.
After all, anything in moderation is a boon.