Buy Now Pay Later is an innovative payment solution that is spreading very quickly in our country, although the phenomenon is only just beginning. Buy Now Pay Later allows customers of e-commerce (and in some cases also of physical stores) to pay instantaneously (or almost) their purchases.
The primary advantage of this method of payment lies in not having to deal with the bureaucracy that instead characterizes a traditional financing. Below we’ll see what it is and how this type of service works, what are the platforms that offer it, the benefits and risks and everything you need to know about it.
What is it and how does the Buy Now Pay Later Method work?
On the consumer’s side, the buy now pay later method provides the opportunity to pay for their purchases in installments (from 3 to 5 installments depending on the platform), without having to deal with the bureaucratic process required for a traditional financing. The first step to take is clearly to choose the company that offers the service.
Each of these is affiliated with a network of participating stores. These can be shops selling electrical appliances, computers, telephony, clothing, DIY, sporting goods and much more. Once inserted what is desired in the cart, the customer will have to select as method of payment the installment one. At this point the “game” will be done.
Buy now Pay later represents a great opportunity also for stores. Thanks to this innovative method of payment in fact, the shops have the opportunity to retain customers, but also and above all to approach new ones. All this raising in a physiological way the average amount of order and stemming the phenomenon of abandonment of the cart. Obviously the operators will have to pay a commission (from 2% to 6%), deducted directly from the purchase.
Platforms and Services
Buy Now Pay Later can be defined as a win-win solution, where all players in the game get benefits. For this reason, there are an increasing number of platforms that offer such a service. Let’s take a look at some of the most used of the moment.
Scalapay
One of the best known and used is definitely Scalapay. One of the main peculiarities of the portal lies in the fact that it is not necessary to have a credit card.
In fact, a simple rechargeable prepaid card is sufficient. Scalapay allows you to defer purchases in three convenient installments: one at the closing of the cart, one after 30 days and the third after 60 days. If the monthly instalments are paid on time, the operation for the customer is completely at zero cost. If not, penalties are applied.
Klarna
A similar service is also offered by Klarna, active in our country for just over a year. This platform also allows payment in three installments as the previous one, but in the future plans of the company there is also to increase the number of possible shares.
Clearpay
Next we also find Clearpay, which allows payment in four installments, but charged every 14 days.
Amazon and PayPal
Even giants like PayPal and Amazon are moving in the same direction. To take advantage of the PayPal service, you must use a debit or credit card, or in alternative a simple bank account connected and confirmed.
Amazon instead, for the moment offers the installment payment only on some categories of products. The service is also intended only for selected users, with a good history of purchases, and allows you to pay in 5 installments without additional charges. The first installment is withheld from the credit card at the time of purchase, while the remaining 4 installments are paid regularly every 30 days.
Advantages and Risks of the Service
As explained earlier, Buy now Pay later solutions offer benefits to all parties involved. For retailers, making this service available means growing their business. Buyers are given the opportunity to approach “shopping” in a more serene manner. Obviously for the platforms it means earning from commissions on orders.
But what are the risks of this payment method? From a purely technical point of view there are none, since we are talking about secure transactions like others made with a credit card. However, there is a risk, and it is that of over-indebtedness of the buyer. In America, for example, Buy Now Pay Later solutions have existed for several years.
These methods have literally revolutionized the ecommerce world, but the excessive ease with which installment payments can be obtained can cause consumers to fall into the trap of taking the “longest step”. The reason is very simple: each platform puts a limit on purchases, usually set at a few hundred euros, but no one prevents the consumer from using the services of several companies at the same time. The risk, therefore, is to find oneself paying a total installment that is too high for one’s economic possibilities.