Credit card is always a popular choice for buying anything as it comes with an interest-free period. We now have a similar but a better alternate option, which is Buy Now Pay Later. With Buy Now Pay Later, you can get approved for credit immediately and use them for your needs. You can repay the money later at your convenience. If you are not owning any credit card or your credit card is rejected, go for Buy Now Pay Later (BNPL).
Buy Now Pay Later Explained
Buy Now Pay Later is an enticing cardless payment option which lets you buy any product or service now and pay the money later. In simple terms, BNPL offers the features of a credit card where you do not have to hold an actual physical credit card. Firms which offer the BNPL option, collaborate with merchants and agree to provide BNPL option at their stores. Hence, they are referred to as check-out lending platforms.
FlexPay is a similar kind of BNPL product which provides users with a true digital credit card like experience. FlexPay facilitates offline purchases where you can scan any UPI QR code or a UPI ID. It’s accepted by over 10 Million+ UPI accepting merchants in India right from small Kirana stores to large retailers.
‘Buy Now Pay Later’ vs. Credit Card
Some of the differences between ‘Buy Now Pay Later’ and credit card include:
- Application process – Creating a BNPL account is instant and hassle-free, as it involves no credit checks, no income assessment, and no debts discussion. On other hand, the credit card application is tedious and time-consuming. BNPL serves great benefit to people who do not have any regular source of income or have debts to repay.
- Credit limit – With a credit card, you get a predetermined limit that can put a cap on your spending. While some of the BNPL services also work on similar lines. But you may not have as much credit limit as a credit card, which helps in responsible spending.
- Repayment – With BNPL, you can buy anything, interest-free. To an extent, credit cards also offer interest-free periods on purchases which are around the same time as the BNPL repayment window.
- Cost – With a credit card, if you carry a balance to the next due date, you are likely to pay excess interest. Buy Now Pay Later on the other hand usually has lesser interest compared to a credit card.
- Acceptance – Credit cards are globally accepted. Buy Now Pay Later service is also expanding quickly and is allowing customers to access the services at many locations.
- Consequences – In case of BNPL, if you fail to make a payment, you will have to pay the fees on time, and if not done, you may be restricted from making more purchases. Also, if you default on your EMIs, you may be considered an unreliable customer which can hamper your credit score.
In case of a credit card, you have to pay late payment fees and interest as well. Also, there are high chances of hampering your credit score.
- Perks – Credit card attracts several perks, right from travel insurance to airport lounge access and more. BNPL on the other hand is low on perks.
Benefits of Buy Now Pay Later Over Credit Cards
- Relaxed eligibility criteria – To avail a credit card, you need to meet a few eligibility parameters which include, your income, credit score, credit history, etc., because of which many applications get rejected, if you fail to meet any of these criteria. BNPL on the other hand doesn’t require you to share your card or bank details, and it is also not mandatory to disclose your financial information.
- Ease of use – With BNPL, you can eliminate the option of disclosing your bank account details, and it is a much safer and fast payment option. You also need not share your OTP details.
- Free of cost – Credit cards usually have an annual fee. But in case of BNPL, the service is entirely free of cost, with no usage fee either. You just need to pay your outstanding bills on time and failing which can accrue extra interest.
- Lower charges – Having access to micro-credit is easier with BNPL as there is no pressure of hidden charges or maintenance fees.
BNPL model is gradually becoming popular among everyone due to its ease, security, and affordability. FlexPay, one of the best pay later apps available in India has enabled users with ‘scan now and pay later‘ option on UPI. It is one of the best choices for people who do not have funds available in their bank accounts.