The pay-later scheme is undoubtedly one of the most sought-after modes of digital payments globally. Especially during the pandemic, the BNPL (buy now pay later) payment method reached extreme heights of being famous. The simple answer to why it grew so famous can be its customer-centric approach, transparency, and flexibility. No doubt, these make the digital payment method a hit among millennials and GenZ customers.
Centering around the rising popularity of this pay-later payment method, a new fintech vertical has emerged. The BNPL industry has already grown to a massive $97 billion and is still growing. So, what makes it so immensely popular? Read this article to know more about it.
The Convenience of Shopping
Millennials and GenZ customers prefer fast and convenient payment methods for their online shopping. It takes time to complete payments in the traditional methods. That is where the BNPL scheme intervenes and considerably cuts down payment processing time. It is because customers can complete their purchases now with the freedom to pay the amount later.
Stats reflect how the age group 18-24 loves the pay-later program, as there was a 62% usage growth between 2020-2021. It shows that customers are enjoying the convenience factor.
The Unavailability of Credit Options
Most financial institutions, including banks, do not lend people money unless they match their long list of criteria. Therefore, it becomes a problem for people with low income, no income, and no credit score. And unless someone guarantees on their behalf, they won’t be eligible for loans or credit cards. It is common among GenZ customers as they are first-time borrowers.
On the contrary, BNPL, although it has its rules and regulations, is not as strict as getting a credit card or loan. BNPL service provider companies use alternate data and AI to study a person’s profile before allowing credit access. It makes way for first-time borrowers to have credit.
In fact, anyone can use a BNPL payment method like a credit card. Plus, the absence of interest rates makes it even more convenient. All that users need to do is ensure they repay the amount within the stipulated date. Therefore, it is common for the payment method to be popular.
Easy EMIs and Fast Refunds
Most people who prefer the BNPL payment method use it to make small purchases. The digital payment program allows them to break down the purchase amount into small EMIs scheduled at a definite number of days, weeks, or months. These are interest-free, allowing people to buy goods they previously weren’t capable of.
Fast refunds are also another thing that makes the BNPL program so popular. If you purchase a product online and then cancel it, the eCommerce company issues a refund. But, it usually takes some time, say a few days, before the amount reaches your bank account.
In the ‘Buy Now, Pay Later’ scheme, the refund process is instantaneous. The transaction is canceled, and all obligations cease on the spot. Indeed, it is an excellent benefit.
Final Thoughts
The buy now pay later program has garnered appreciation from customers globally. Thanks to its pay-no-interest-but-pay-later payment method, that has helped every type of buyer in one way or another. That is why more than 60% of Americans today have used this service within the last two years.