Let's Decode Buy Now Pay later (BNPL)

Buy Now, Pay Later, or BNPL, is a method of payment that lets you make a purchase without having to pay cash up front. Typically, you sign up with a business that offers this service, and that business pays you when you make a purchase.

However, after the lender makes a payment on your behalf, you must make the required repayments within a predetermined time frame. In contrast to a personal loan, the BNPL programme does not charge interest. You have the option to pay it in full or in free equivalent monthly installments (EMIs). The lender may be required to charge you interest on the amount if you don't pay it back within the specified time period. A longer wait time could negatively affect your.

How BNPL works..?

The sole practical difference among BNPL service providers is in the terms and conditions. This is how it typically goes:

Purchase something from a store that is a participant.
The "Buy now, pay later" option should be used.
Put a little portion of the total purchase price down.
A series of interest-free EMIs will be used to deduct the outstanding amount.

Yaa yaa I know.. Let's look at basic BNPL System Design.

1 - The customers (A and B) purchase products online or at a merchant shop and need to pay Rupees 100 for the product. 2 - The merchant provides multi-lender BNPL services for the customers. 3 - Multi-lender BNPL provider like Charge After seeks loans from tiered lenders (a 𝐰𝐚𝐭𝐞𝐫𝐟𝐚𝐥𝐥 of lenders). Depending on the customers’ credit status, the loan might get declined by the big banks (Prime Level), but get approved by FinTech firms (Near Prime Level). 4 - The BNPL provider pays Rupees 90 to the merchant. 5 - The customers pay the 𝐢𝐧𝐬𝐭𝐚𝐥𝐥𝐦𝐞𝐧𝐭𝐬 to the BNPL provider. Depending on the payment schedule, it can be as per agreements at the time of purchase. Multi-lender BNPL provider delivers diversified financing options to the shoppers. The credit approval rates can go up to 85% due to the multi-lender network.

and that's the wrap buddy...💡