Cash that is readily available at the touch of the screen is a dream come true for many of us. Line’s Cash Now Pay Later feature is one of the fastest and easiest ways to realize that dream. All you need to do is visit Line and follow a few quick, easy steps.
That brings us to Buy Now Pay Later. Is Cash Now Pay Later (CNPL) replacing Buy Now Pay Later (BNPL? Will the option to get cash in hand beat the opportunity to buy what you want and pay back later? We’re going to answer that below.
Consumer spending
Who doesn’t love a good interest-free payment plan that allows you to buy now and pay later at your own leisure? With the majority of payment providers offering consumers Buy Now Pay Later options, there is no dearth of consumer spending.
What was once a payment method restricted to a certain niche of consumers is now a full-blown option available to almost everyone out there.
The BNPL trend enables consumers to spend more and is even being termed as the future of finance for millennials. But there are fears that it encourages consumers to depend heavily on debt and promotes spending beyond one’s means.
The reach of BNPL is so much that even people who usually make payments using a credit card or debit card now get constant alerts to buy now and pay later.
Riding the BNPL wave
In a Buy Now Pay Later transaction, you purchase the items you want and choose the option to pay later, free of interest. The fintech companies and payment providers that offer these payments services make money through commissions from retailers or sellers.
For consumers, it means buying what they want now without having to pay for it right away. For retailers, it means increased sales. Competing with fintech companies, banks are also getting on the BNPL bandwagon.
Some of the biggest banks in the country already have BNPL services active, but currently, charge interest for them. They are now considering removing the interest charge so as to compete with fintech companies.
For retailers, accepting BNPL services is a no-brainer. When customers are given the option of paying later, that too, without interest charges, they tend to shop more. The bigger the shopping cart, the happier retailers are. And they offer generous commissions rates to BNPL service providers in return.
Risk of Buy Now Pay Later
The introduction and growth of BNPL services seem like a win-win situation for everyone involved. But beneath lies some serious financial risk. If customers are not vetted properly regarding their ability to pay the amounts they owe later, it could lead to a severe accumulation of debt, affecting both consumers as well as service providers.
The lack of proper scrutiny in BNPL services at present is alarming, unlike Cash Now Pay Later. Also, these services spark shopping sprees among customers without giving them the time and space to think about the repercussions of their purchases. Affordability checks are not done by many lenders either.
There aren’t many rules about a single customer making multiple BNPL transactions either. And since there is a massive lack of regulation in this industry right now, it becomes difficult to identify whether lenders are treating consumers in the right way as with other credit services.
BNPL: boon or bane?
Even though BNPL services have grown at a rapid pace with many customers favoring it above other payment methods, the growth has happened without proper regulatory oversight. Besides this, it is highly probable that most consumers are not even aware of the terms and conditions of the payment scheme they are opting for.
The danger in the continued use of BNPL services is that customers are being offered high-value products now as well. Till recently, only small amounts were being borrowed for making purchases in fashion and beauty products.
Now, the average spending or borrowing amount is set to multiply as lenders are looking to partner with retailers selling products of higher value. This includes electronic items, bedding and mattresses, furniture, etc, broadening the customer base for BNPL payments.
However, this is catching the attention of lawmakers who are noticing how easy it is for customers to make purchases without even thinking of paying an amount for the next few weeks. And given that many consumers are not usually aware of their financial dues, this industry could easily spiral into a massive problem if not regulated properly.
The road ahead: Cash Now Pay Later
Given the inherent risks of BNPL services, regulations are being considered. They are likely to be put in place in the near future. The right affordability checks will have to be introduced. Only eligible consumers should be allowed the use of these services. New rules are expected to be set in 2022.
Till then, customers will continue buying at will driven by the sheer pleasure of shopping without having to pay out of their own pockets for the moment.
How Cash Now Pay Later is changing the field
With Cash Now Pay Later, the middleman in BNPL is eliminated. The relationship between the lender and the borrower is direct. What you do with the money is completely in your control. Ideally, Line’s Cash Now Pay Later offers Cash Now Pay Later as a direct means to use for emergencies.
Pay dues on time, clear credit card debt or get extra cash for a rainy day. You can even pay for that gift you needed to get for the spouse’s birthday. It’s completely your call how you use it.
Repay it within the scheduled stipulated time and you become eligible to get more. No credit checks and no interest rates. Just money when you need it the most so you can live life uninterrupted.
