“Buy Now, Pay Later” is changing the game…

The four words “Buy Now, Pay Later” are pretty self explanatory, but for those who are still wondering what it is, let me briefly explain.

Typically utilised on ecommerce websites, “Buy Now, Pay Later” is a checkout process which allows the customer to checkout and delay his or her payment of the product or service being purchased. The merchant doesn’t feel a thing and receives the income as if it were purchased through credit card. The checkout provider orchestrates the payment to the merchant and a micro-loan to the consumer.

So what’s the benefit?

Not having to pay a lump sum of course. How cool can it be to pay of $500 worth of goods over 6 months? And for the merchant, you increase the incentive for a customer to make the purchase by providing options.

So who are these checkout providers? In United States you find the likes of Paypal Credit and Affirm. In Europe, there’s the conglomerate Klarna, and down under in Australia, the ecommerce industry is being taken by storm from the likes of Afterpay and zipPay (zipMoney). Each of these businesses offers their own terms and conditions and have different methods of delaying your payments. For example, Afterpay requires your credit card information and then splits your payments into four smaller payments over time whereby zipPay offers a new line of credit, dismissing the need for a card, and allows you to repay this account over time.

There’s a general consensus. Buying is fun, and new stuff is cool, but halving your spendings account in one hit isn’t.

What are your thoughts on the “Buy Now, Pay Later” payment option?