BNPL is an innovative payment system that offers credit to shoppers at terms more attractive than other credit options feels Bahaa Abdul Hussein. The popularity of BNPL has ensured most retailers offer this payment option. The biggest attraction of BNPL is that it does not charge any fee from shoppers. A question that remains is whether there are any hidden costs and fees. Let’s look at the answer to this question.
BNPL is a transparent payment system that allows shoppers to buy now and pay later. They can choose to pay in installments and don’t have to pay any interest. It is this feature that makes BNPL so shopper-friendly. The only costs involved is the fee that the seller has to pay. For the buyer, there are no costs or fees.
So, are there hidden costs and fees? The answer is both yes and no. Yes, because there are costs and fees. No, because most BNPL platforms don’t hide it. What are these other charges? Let’s understand it using an example.
You may buy a product for $100. You can pay the first installment of $25 and take the product home. The remaining $75 has to be paid in three installments of $25 payable once every two weeks. Once you complete the payment, the transaction is closed.
Where are the other charges then? These charges come if the payment is not made on time. There is no interest charged for BNPL, but the interest starts even if you delay the payment by one day. Apart from interest, there is also a late fee or penalty. The late fee can be pretty stiff and be up to 25% of the total value.
Shoppers have complained of how they had to pay huge fees for the slightest delay in repayment. There have also been issues where shoppers were charged extra fees in cases of product returns. These are issues of concern that need to be addressed to make the system completely transparent.
BNPL is free of hidden charges provided you pay up on time. If you delay payment even by a day, then additional charges crop up. These are not necessarily hidden because they are part of the BNPL agreement. It is important that the BNPL provider be transparent and reveal all these charges and how they work. Shoppers need to read the fine print, understand the charges, and ensure they are aware of it. Awareness ensures they don’t get caught in a debt trap.
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