BNPL of Buy Now Pay Later is a new system of payment that allows a user to purchase an item and pay for it later.
In this scheme, the payment to the seller is done by a company and the company then makes the person pay for the purchase later on in the mutually agreed tenure.
Every major brand has a Buy Now Pay Later scheme in their online store as this helps them in increasing their purchasing power.
The costly things get affordable because BNPL also offers flexible payment options which will break the payments into 3-6 installments.
If you choose to pay the lumpsum BNPL payment, then there will be no interest charged however, if you choose to break the payment some interest rate is charged on it.
Some BNPL companies also offer no Cost EMI payments for repayment which makes it an amazing option for them.
It is a very attractive scheme for individuals, hence, it is important to know what exactly is the BNPL, what the risks involved are, and much more.
What is the BNPL Scheme?
BNPL is a specialized purchasing scheme provided by various brands in partnership with various companies to the individual purchasing an item.
When compared with other loans, the interest levied on the items is none if you pay the amount back within the stipulated time.
You can also get a no-cost EMI option while using the BNPL payment method. Failure to pay back the amount puts your credit score at risk and it may result in a lower CIBIL Score.
So, timely payments are necessary for the BNPL to work toward your advantage.
Adavntages of BNPL Scheme
The following are the advantages of the BNPL Scheme-
- With the BNPL payment option, the individual will have increased affordability due to which he/she can spend more and purchase things
- It provides instant access to credit and allows individuals to purchase the items whenever it is needed
- It provides a safe and secure payment method that enables you to transact online
- You can choose the repayment tenure based on your financial assessment
- BNPL also comes with no-cost EMI so, repayment using EMI also helps
- It is a simple and transparent process, you can read the full terms and conditions and make the smart decision
Eligibility Criteria for BNPL
The following are the eligibility for BNPL-
- The individual getting the BNPL scheme must be a resident of India and must belong to tier-1 or tier-2 cities
- The individuals must be above the age of 18 years and the maximum age must be 55 years
- The individual must be salaried or self-employed and must have a stable income source
- For getting the BNPL, KYC is important along with a bank account also the KYC documents must be provided/uploaded whenever asked
- Voter’s Identity Card
- Driving Licence
- Aadhaar Card
- NREGA Card
- PAN Card
Difference Between Personal Loan and BNPL
The following is the difference between Personal Loan and BNPL-
|The maximum loan offered under credit card payments is 25 lakh depending on the credit limit||The maximum loan offered under BNPL is 1 lakh|
|You can get secured and unsecured loan||Only unsecured loans are offered|
|The interest is levied on the principal amount||No interest in the principal amount|
|No restriction on the spending of the money||The spending using the BNPL is limited|
|A tenure of up to 60 months is granted under this scheme||A tenure of upto 90 days|
Difference Between Credit Cards and BNPL
The following is the difference between credit cards and BNPL-
|Hidden charges and payments are charged to the credit card||BNPL follows a lot cost pricing|
|A good credit score is required for applying for the credit car||Not mandatory to have a credit score|
|Credit cards can be accepted throughout the country anywhere with a POS machine||BNPL services are provided in online stores|
|Standard interest-free period||Interest – free credit period can go up to 48 months|
|Getting approvals is slightly difficult||Easier approvals|
|You have the option of paying only the ‘minimum due’ amount||You have to pay the fixed EMI on the scheduled date|
Companies Providing BNPL Services in India
The following are the companies providing BNPL services in India-
- Amazon Pay Later
- Ola Money Postpaid
- Paytm Postpaid
- Capital Float
RBI Guidelines on BNPL
Due to the BNPL services fintech companies not following strict KYC guidelines hence, the RBI came up with various measures to ensure that the BNPL services industry does not get disrupted.
Under the new RBI guidelines, non-banking institutions cannot use credit lines provided by NBFCs to the BNPL companies and issue pre-paid payment instruments to consumers. The eKYC process done by the BNPL companies is made mandatory and follows the said guidelines.
The maximum limit for the BNPL companies is up to Rs. 1 Lakhs. This credit limit can be utilized as per the requirement of individual.
The BNPL is an unsecured loan and is required to be paid back within the repayment cycle.
Buy now, pay later (BNPL) is a short-term financing and is also called a point-of-sale (POS) installment loan. No interest is levied on the repayment of the BNPL. These loans are also called. Consumers can make purchases and pay for them over time after an up-front payment.
As long as you repay the loan on time, your CIBIL score will not be affected however, if you fail to pay the BNPL repayment then your credit score will be affected.