Buy Now, Pay Later: How your purchasing habits have been proven to cause you to spend more money.
BUY NOW PAY LATER (BNPL) allows customers to buy something now and pay for it later in installments.
Because it allows millennials to pay in installments, it has become a popular way for them to shop. “It’s a safe method to borrow money if you pay it back,” Alice Beer remarked on This Morning after investigating the scheme.
“However, the Financial Conduct Authority does not regulate it.
“They don’t do a hard credit check, so you may have a credit card debt that you can’t pay off but still purchase online for non-essentials and sign up for a lot of these other programs.
“It’s a really simple method to rack up debt, and that’s what people should be concerned about.
“It can quickly escalate and spiral out of control.”
People will be reminded when their payments are due by these BNPL companies.
They will not, however, charge a lot of interest if these dates are missed.
Consumers will be accommodated by BNPL companies in order to help them pay off their debt.
However, if the debt continues to grow and consumers are unable to pay, they will eventually transfer your debt on to a debt collection agency or charge you if payment is not made.
BNPL is a £2.7 billion market that allows customers to purchase for a variety of products online.
These transactions can be large or small — the shop pays the company to service the customer’s money, and the bank covers the debt until the customer repays it.
“Companies like Klarna will argue it is not in our interest to penalize the customer,” Alice explained.
“This is because they make their money from the store, so they don’t have to impose excessive interest rates or late payment fees to the customers.”
“Retailers love it because it’s been established that if you don’t abandon your basket, you spend 55 percent more, and you spend more because you’re not anxious about what’s coming out.”
“Credit cards give you section 75 protection for everything above £100,” Alice noted when comparing BNPL to credit cards.
“These systems do not provide really good solid consumer protection.
“They do provide buyer protection,” says the narrator.
“Paypal and Amazon have only recently begun to offer this service. If something goes wrong, they’ll take action.
“However, if I were purchasing anything valuable… “Brinkwire Summary News” is a section I’d like to see.