BNPL is a very strong tool that lets you spend on your desired product in easy instalments for a few months.
The current situation has changed the purchasing behaviour of consumers on a large scale. The consumer has become more careful and has been opting for digital ways for transaction(s) owing to the lack of cash flow. Here’s when the concept of ‘Buy now, pay later’ comes into play that enables consumers to purchase their desired product without worrying about the payment. It allows them to credit money without a credit card. It helps everyone to get products on an EMI basis or a short-span loan system. Primarily, millennial have been sharing tremendous response to this who believes in instant gratification and refrains from immediate expenses.
On the other sphere, small businesses are getting benefited from this new way of business ahead of the festive season. Crediting money has become a way to overcome the gap in lack of cash without a debt scenario. The Kirana store or self-employed people often face problems with loan credits from the banks. The companies are offering them instant short loans without much documentation and hassle. Giants like Amazon pay, Paytm postpaid, Flipkart pay later have made the online transactions easy and convenient for the consumers.
Not just in India but internationally the concept of instant gratification has become a thing amongst the youth majorly. The interest-free loans and EMI for your favourite vacation or camera seem pretty affordable. The money is not more than 50,000 when it comes to these small-size loans for purchasing. It is a way for the labour, poor, and middle-class families to celebrate the festival season. These payments have been growing to 30% quarterly. Lockdown relaxation and increase in the number of vaccination has encouraged the customers to shop and spend again. This has now become a win-win solution for the consumers, loan lenders, and Fintech companies as well.
Benefits for consumers
The consumer is benefiting from the immediate process of credit and loans on their mobile. The technology has helped in the speedy system of loans with a 0% interest rate
What should the consumer look out for?
The competition has led to a huge boom in Fintech companies. RBI has introduced regulations and guidelines to avoid scams. But, it’s not all glitter everywhere. The consumer has to be careful while trusting an app with their private information and opting for a loan or credit. The problems could be anywhere from the lack of reporting and following rules and regulations.
Licensing and registration
Check proper registration and license of the company. Also, make sure that they have RBI approval and follow RBI regulations to be safe from scams. Check the company for proper establishment and authorization. Avoid giving unnecessary permissions to the app that can access your private data.
The apps do not usually report all of their loans and credits. A consumer credit score is unevaluated and could result in over-burden and over-leveraged. It is necessary to have a report on premiums and payments for loans and credits. The lender has to ensure that they are following proper regulations to maintain records and evaluate customers.
Unethical method for money retrieval
Often when the loan is not returned, RBI has a system to retrieve the money. The new money lenders eager to take their money back can use unethical methods to retrieve their money. These problems increase customer harassment, aggressiveness, mental torture, and violence. The third-party collection vendors cross the line when not properly monitored.
BNPL is a very strong tool that lets you spend on your desired product in easy instalments for a few months. It is indeed a great option to enjoy your festive season without worrying about overburdening yourself. On the other sphere, tie ups between FinTech and e-commerce players have also resulted in offering a better consumer experience ahead of the festivities. Thus, it has become a preferred option amongst the millennial.
Source: Business World