What is Buy Now, Pay Later (BNPL)?

Buy Now, Pay Later (BNPL) is a consumer financing option that allows customers to purchase goods or services immediately and defer payment over time, typically through interest-free installments. This model has grown rapidly in e-commerce and retail due to its flexibility and ease of use.

How BNPL Works

  • A customer selects BNPL at checkout

  • The BNPL provider pays the merchant upfront

  • The customer repays the provider in scheduled installments, often interest-free for a set period

Example

A consumer buys a $500 smartphone using a BNPL service and repays in four bi-weekly installments of $125 each.

Benefits

  • Increases purchasing power for consumers

  • Boosts conversion rates and average order value for merchants

  • Provides alternative credit access without traditional loans