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What is Buy Now Pay Later?

Buy Now Pay Later, referred to as BNPL, is a unique payment facility that helps you purchase products or use services without the need to pay the total cost upfront. True to its name, this option lets you buy products now and pay the entire amount later in instalments.


You can repay the total cost in fixed amounts across a chosen tenure, which varies from a few weeks to months. Over time, BNPL has become an increasingly popular payment system, with most retailers providing this convenient solution.


That said, you have to be cautious before opting for this payment method. Make sure you read the terms and conditions properly and understand how this option works. With answers to the question, “What is Buy Now Pay Later?”, read on to learn a few of its benefits and how it works.

Benefits of Buy Now Pay Later

There are multiple advantages to using this option. Here are a few of them:

  • Helps you make big-ticket purchases without depleting your savings

  • Enables you to improve your credit score when you make timely repayments using a BNPL card 

  • Allows you to divide your BNPL payments across multiple EMIs

  • Does not affect your credit score when you apply for a BNPL card, as there is no hard inquiry 

  • Allows you to avail the payment option in a straightforward process 

What’s more, you can buy now and pay later at No Cost EMI, making it a cost-effective choice! With all these benefits of Buy Now Pay Later, you can get your favourite products without stressing about payment and monthly finances.

How Does Buy Now Pay Later Work?

This payment system has different terms and conditions, depending on your plan. While it offers flexibility in payment, the facility lets you buy products without the need to pay upfront. You can repay the entire amount in specific values across a certain timeline.


The amount is debited from your bank account or debit/credit card based on the option you provide. You may have to make a small down payment based on your chosen payment plan. Once you complete your purchase, you receive a statement detailing the total amount you owe. 


This total amount is inclusive of interest and fees, if any. Making a down payment helps reduce the EMI burden, helping you manage your monthly finances. However, read the terms and conditions to avoid unexpected costs. 

Eligibility Criteria for BNPL

Meeting certain eligibility parameters is crucial before opting for the Buy Now Pay Later facility. Here are some of them.

  • You have to be an Indian 

  • You must be residing in a first or second-tier city

  • You need to have a bank account

  • You have to provide valid KYC documents

  • You need to be a salaried individual

Difference Between BNPL and a Credit Card

There are some key differences between a credit card and a BNPL facility: 

Credit Cards


There can be hidden charges levied

Features a transparent and low-cost pricing model

Getting approval isn’t easy and only certain individuals qualify

Only certain fintech organisations and e-retailers provide BNPL services

A good credit history is needed

Credit history is not mandatory  

Come with standard interest-free periods

Interest-free periods can go on for 48 months

It is slightly difficult to get approval

Approvals are easy and hassle free  

The option of paying only the ‘minimum due’ is present  

The fixed EMI must be paid as per the scheduled date  

Interest rates can go up to 48%

Interest rates can go up to 24%  

Interest rates are fixed  

Interest rates vary depending on several factors  

FAQs on Buy Now Pay Later

Is it a good option to choose the Buy Now Pay Later facility?

Yes. Buy Now Pay Later is good if you diligently repay the borrowed money as agreed. Consequently, you get to manage your finances while purchasing essentials. It can even help in building and improving your existing credit score.

What is the ideal credit score I need to have when opting for Buy Now Pay Later?

Companies offering BNPL services do not initiate a hard credit check to approve Buy Now Pay Later services. However, it is always better to maintain a good credit score.

Why is BNPL growing?

Buy Now Pay Later (BNPL) has seen a significant rise in popularity, and two main factors driving this growth are the availability of No Cost EMIs and easy accessibility. These features have made BNPL an attractive payment option for consumers seeking a more flexible and affordable payment solution.

Will BNPL replace credit cards?

It is not necessary that BNPL may replace credit cards. However, BNPL is set to become the preferred choice of payment in Indian households.

What are the reasons to opt for Buy Now Pay Later?

Buy Now Pay Later (BNPL) payment solutions have become increasingly popular, and there are several benefits to opting for this payment method. Firstly, it lets you pay your bills and purchase your favourite products instantly. This can be particularly useful when you do not have the cash available immediately.


Additionally, no interest charges are associated with when you use this payment solution, which can save you money. As long as you make your payments on time, you will not have to pay any interest on the amount you spend. 


Finally, BNPL is secure and encrypted, providing peace of mind when making transactions.

Is interest levied on Buy Now Pay Later transactions?

No, there is no need to pay interest on Buy Now Pay Later transactions. However, if you fail to make the required payments within the specified time, you may incur interest charges and late fees.

What happens if I do not pay BNPL instalments?

You may incur late fees and interest charges if you do not pay your BNPL instalments on time. Your credit score may also be impacted, and the unpaid debt may be sent to collections. 

Is BNPL a credit risk?

Yes. BNPL can be a credit risk as it allows you to defer payments for goods or services. If you fail to pay your instalments, your credit score can get affected, and you may incur interest charges and late fees.

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