Personal loans, BNPLs, and credit cards come in the same category of loans which benefits the lender for some time but it costs the interest for sure. All of these comes with high interests and specific durations. In this article, we will talk about these three aspects of loans and we will also see how they can be helpful sometimes.
What is BNPL
BNPL is stated as buy now pay later. They convert your payment into installments on any e-commerce website. They provide all the facilities to pay it online. Some charge the interest for the facility but some do it without any charges. Its business model is very simple, They integrate certain companies with it. BNPLs can currently be enjoyed many number of e-commerce, food-ordering, ride-sharing, travel booking, online groceries and services websites, and even on Edu-tech portals among hundreds of other merchant platforms. The transactions can be made seamlessly during checkouts in a safe and secure one-tap manner without having to enter card details or OTPs.
To assure secure payments and verified accounts, KYC is done before the BNPL service. For merchants- they can take payments through cash on delivery modes, credit/debit card, or pay later like BNPL services.
Microcredit solutions are preferred now to better manage recurring and occasional payments and purchases. In the last few years, BNPL has hugely taken a turn in the Indian market. Many e-commerce giants, leading banks, and startups are using BNPL as a good source of transaction and management. And no doubt it is making great progress.
How does BNPL compare with personal loans and credit cards?
Credit card is acceptable all around the globe and has vast facilities to provide. Credit cards come with much-assured amounts and provide certain facilities like Lower interest options, encash Contactless payment, Insurance, Utility Bills, Easy access channels. There are other additional benefits also. But if we talk about BNPL, it is limited to partnering merchants only. Though the service providers are regularly adding hundreds of partners.
Credit cards can come with major benefits but the interest rate of late payment can be difficult to manage. BNPL services are smaller but they are simpler. Credit facilities for consumer purchases from partnering merchants often result in EMIs involving no interest charges but only a one-time fee in most cases.