Let’s talk about ‘Buy Now, Pay Later’

Shining a light on the case for Buy Now, Pay Later from a consumer, investor and economic perspective.

Buy Now, Pay Later is trending with consumers, investors and regulators world wide. The reinvention of an old product onto new and exciting digital platforms has the world scrambling for more. As someone part of the generation using Buy Now, Pay Later for everything from dentistry to instagram critical Louis Vuitton bags, I feel it’s time we reviewed the proposition for consumers, retailers and the broader community.

Buy Now, Pay Later (BNPL)has generally been defined as a ‘payment service that allows consumers to delay payment or pay by instalments.’ For regulators a clear distinction of the product is that it doesn’t charge interest to the consumer for the use of credit. This means that instead of parting with $500 today, you can purchase on BNPL for $125 every fortnight over the next 8 weeks, at no extra cost. This creates a win for you, the retailer and the financier.

If this sounds familiar then it’s probably because BNPL is a well marketed, modern version of products like Lay-By, hire purchase and to a lesser extent credit cards.

Consumers + Consumption

Buy Now, Pay Later has been thrust into the faces of millennials and Gen Z’ers as social media personalities push lifestyle, products and instant gratification. Afterpay has experienced immense growth as they ingeniously engage one of the most ‘influential’ Americans while they launched into the U.S. market.

Since mid 2016 the number of customers using BNPL services has risen from 100,000 to over 5.6 million. The rise of the service has captured the key millennial market that had previously avoided debt like credit cards.

It’s not hard to see why the product is so successful. It brings payments forward, enabling you to shop when you’ve been caught out the day before payday, or when you want to spread the cost of a big purchase out into smaller more manageable payments. The product reduces the barriers to…