BNPL: Buy Now Pay Later | How Convenient Is This Business Strategy? | Is It A Trap?

INTRODUCTION

Our country India is the most populous country in the world. So naturally everyone should have food, water and shelter. Obviously all these facilities are not free. That's why the government makes sure that everyone is getting the basic amenities of life by making some schemes and programs. Many private companies come into play and provide loans to the needy people. Many are benefited and many are harmed. Many lives are spent in repaying the loan. To prevent such problems many companies have come up with BNPL scheme. BNPL, i.e. buy now pay later, is a system where pay companies pay your small expenses and take money from you after a few days, without any interest. Companies like Slice, Amazon, Paytm etc provide such services. Sounds like a wonderful idea, but is it a convenience or a trap?

THE REALITY OF BNPL SYSTEM

Credit card is a bit similar to BNPL. In credit card, more money can be taken on loan as compared to BNPL. But not everyone has a credit card. Whereas anyone can use BNPL. Realizing this difference, many companies implemented the BNPL system. In this people are given small loans. Many Indians have used this system and it continues to grow. And big companies are taking advantage of this growth. With BNPL, consumers are buying things that they could not buy earlier. It is not wrong to take loan for big things or programs, but what is the loan for buying vegetables and clothes? This is a surefire way to fall into a debt trap. To avoid this trap, our government is trying to ban those services. Vulnerable groups such as low-income customers (students, teens, etc.) will jump on this service. These groups are more inclined to make purchases out of necessity. Unfortunately, this means that they are most likely to fall into the debt hole. That is why financial knowledge and awareness should be inculcated in children to avoid such services.

CONCLUSION

BNPL has truly revolutionized the way we shop. It's a very simple idea but you need to keep your wits about you in order to stay on top of your repayments. Warren Buffett once said, "If you buy the things you don't need, you'll soon have to sell the things you do need."