BNPL is a payment option that allows shoppers to buy a product now and pay for it later without any interest stated Bahaa Abdul Hussein. At the same time, the retailer gets paid immediately and does not have to wait for the customer to pay. BNPL service providers offer this service that benefits all stakeholders in the system. Let’s look at the technology involved in BNPL.

BNPL Technology

BNPL platforms offer their services to customers through retailers/sellers. The platform uses technology to ensure their services can be used conveniently. Before getting into the technology, let’s look at how the BNPL process works:

  • BNPL service providers offer apps to sellers to integrate into their website/app.
  • When a customer makes a purchase, they see the BNPL option at the time of payment. Selecting this option would take them to the BNPL app.
  • Once the BNPL app loads, it gives different options to users. The options include payment in full after a specified period or payment in installments. Users have an option to choose the number of installments. It is important to note there is no interest on the installments. Usually, one installment has to be paid upfront, while the others can be paid as per agreed deadlines.
  • Once this process is done, the purchase is completed. The seller then delivers the product to the customer. The customer thus gets the product without having to pay now.
  • The retailer gets their payment immediately after the platform deducts its fee (usually 2% to 8%).

The technology used in this process ensures automated payment processing. The customer’s bank account or credit card details are stored securely along with consent to charge the account/card after the specified timeline. This process is automated and payment deducted from the customer’s account/credit card.

The technology should ensure processing for the entire BNPL lifecycle and should not be restricted to payment processing alone. Other areas that the technology should cover include:

  • Automated reminders for payment.
  • Alerts for non-payment, payment delay, and failure of payment.
  • Debt collection.
  • Calculation of interest, penalty, late fee, etc.
  • Reconciliation of payments.
  • Compliance with regulatory norms is a key requirement.

BNPL is a path-breaking payment option that has created a revolution in the world of credit. Beneficial for both sellers and users, BNPL has become popular world-wide. The technology used ensures the entire process is carried out seamlessly offering a great customer experience.

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