BNPL is a type of short-term financing that allows consumers to make purchases and pay for them over time, usually with little to no interest. BNPL services are offered by various financial technology companies and are integrated into many online and in-store retail checkout processes. Key features include:
- Instant approval: BNPL services typically offer quick approval processes, allowing consumers to get instant credit at the point of purchase.
- Payment plans: Consumers can split their purchases into multiple payments over a set period. Common plans include four equal payments every two weeks or monthly instalments.
- Interest and fees: Some BNPL plans are interest-free if payments are made on time. However, late payments can incur fees, and some plans may charge interest.
- No credit check: Many BNPL providers do not require a credit check, making it accessible to a wider range of consumers, including those with poor credit scores.
- Popular providers: Some well-known BNPL providers include Afterpay, Klarna, Affirm, and Sezzle.
- Retail partnerships: BNPL services are often integrated directly into the checkout process of online and physical retailers, making them convenient for consumers.
- Consumer appeal: BNPL is popular among younger consumers who may prefer it over traditional credit cards due to its simplicity, transparency, and lack of long-term commitment.