How BNPL works?

"BNPL payment methods provide consumers with the option to divide purchases into installments, often with a 0% annual percentage rate (APR) and no hidden fees. The financing ranges from short-term pay in X options to longer-term financing for higher ticket items.

BNPL 1.0: Pay in X solutions

Consumers shop online with the merchant on the BNPL provider app or in-store.

• The Pay in X option is presented at checkout, offering a range of one to six months for instalment payments. The consumer then logs in or registers an account and the BNPL provider conducts soft, real-time credit checks to assess the customer's eligibility.

• The BNPL provider pays the total purchase price upfront to the merchant deducting their fees, a few days after the transaction.

• Consumers will make monthly payments to the BNPL provider, paying a specified amount each month over the instalment period.

• If the consumer fails to pay instalments, they are subject to late fees and will be removed from the platform if they ultimately do not pay.

BNPL 2.0: Longer-term financing with interest

Consumers shop online with the merchant on the BNPL provider app or in-store, typically with a higher order value.

• The BNPL provider pre-qualifies the consumer for a specific dollar amount. The consumer then selects a payment plan, which can range from six months to multiple years.

• The BNPL provider pays the total purchase price upfront to the merchant deducting their fees, a few days after the transaction.

• Consumers will make monthly payments to the BNPL provider, which includes a small interest component. The loan is either securitised or kept on the BNPL provider's balance sheet.

• If the consumer fails to pay instalments, they are subject to late fees and will be removed from the platform if they ultimately do not pay.

Source Deloitte"

Author

AiUTOMATING PEOPLE, ABN ASIA was founded by people with deep roots in academia, with work experience in the US, Holland, Hungary, Japan, South Korea, Singapore, and Vietnam. ABN Asia is where academia and technology meet opportunity. With our cutting-edge solutions and competent software development services, we're helping businesses level up and take on the global scene. Our commitment: Faster. Better. More reliable. In most cases: Cheaper as well.

Feel free to reach out to us whenever you require IT services, digital consulting, off-the-shelf software solutions, or if you'd like to send us requests for proposals (RFPs). You can contact us at [email protected]. We're ready to assist you with all your technology needs.

© ABN ASIA