What Is Buy Now, Pay Later? How BNPL Works

The pandemic and the following crisis have hit many businesses and forced us to rethink how we do business. Today, if a company is not represented in e-commerce, it most likely cannot be successful.

The Buy Now, Pay Later principle arose precisely to meet the demands of modern society. And Buy Now, Pay Later apps allow retailers and e-commerce store owners to offer point-of-sale financing to their customers.

According to the website Statista, global buy-now-pay-later (BNPL) transactions are projected to increase by more than $450 billion between 2021 and 2026. It will mean a further acceleration of what was seen between 2019 and 2021 when the alternative payment method increased by almost 400 percent.

Let’s see why BNPL is popular and why it is essential for businesses to pay attention to this approach.

What is Buy Now, Pay Later (BNPL)?

“Buy now, pay later” is a service that allows you to make deferred payments for goods/services. This principle is great for those who need products, but there are no funds to pay for them immediately.

Buy Now, Pay Later (BNPL) gives an advantage to people who cannot access credit funds. Unlike credit cards, BNPLs offer simple and transparent pricing models, allowing consumers to pay for products in installments quickly.

Benefits of BNPL

Medical databases are similar to electronic health records as they also store data on diagnoses, treatments, medications, etc. The main difference is that database systems group data by diseases instead of profiles.

It’s an internal tool for doctors that allows them to assign better treatment by studying similar cases. Browsing the internal database can also be helpful for doctors who wish to raise their qualifications by educating themselves about a given disease.

1. Ability to buy without limits

The undeniable advantage of BNPL is the ability to buy expensive goods when cash is scarce. To make such purchases, you do not need a credit history, which immediately expands the circle of people with access to this option. In the context of fintech, this is a faithful inclusive, and alternative service.

Not surprisingly, such services have become very popular in countries with a low purchasing power of the population. For example, in Mexico, where about 60% of the people do not have access to banking services, and approximately 82% do not have a credit card. In such a society, a product like BNPL is adapted to meet the needs of consumers in limited conditions.

2. Save time

Your buyer does not wait for a salary or postpone the purchase until better times, but takes and buys what they need right now.

3. Ease of use

The option to pay in installments is very convenient and easy, especially for more expensive items.

4. Convenience

Consumers don’t have to worry about paying high-interest rates or late fees.

BNPL Disadvantages

1. Creates debt accumulation

BNPL inherently makes accumulating debt and interest a matter of course. And this is worth constantly remembering.

2. Some personal limits

Some BNPL companies also apply credit checks, which may limit who is eligible for these services.

In general, this and all the main disadvantages of this application.

  1. Customers go to the websites that work with BNPL applications and services.
  2. In the column “Payment,” you need to select the appropriate method of financing.
  3. You are redirected to another website that lists your monthly payments and debt repayment plan. All funding options are listed here.
  4. If your credit score is accepted, and you meet the criteria, you can select the appropriate payment option during checkout.
  5. Checking interest rates (some also offer interest-free options) and payment plans.
  6. Purchase confirmation
  7. You must pay your BNPL provider until the balance is cleared.

Top BNPL Apps

A new look at shopping – “Buy now, pay later” – opens up a whole field of applications. High-interest credit cards instantly lost the market here. Buy Now, Pay Later apps offer a way to afford what you need now and pay off the balance over time, typically within 6-8 weeks.

It is easy to guess that the attractiveness of BNPL applications also lies in the possibility of paying for goods in installments. It is very convenient when you can pay off the cost of the purchase not immediately, but over time. Significantly, prices for goods and services are constantly rising due to inflation and growing prices for raw materials.

Most BNPL apps charge zero usage fees, although some may assess late fees or restrict app usage if payments are missed. Some BNPL plans charge interest, while others do not. If you want to get to know BNPL applications closer, we have reviewed the best applications, in our opinion.


Affirm offers various payment options, which means the user can repay loans flexibly. There is an option here.

“Split Payment” divides the cost into four interest-free payments paid every two weeks. The Affirm version allows you to stretch your timeline up to eight weeks, eliminating the need for an upfront payment.

Affirm allows you to make purchases of $17,500. However, you will need to meet specific requirements for the application to allow you such a limit.

Affirm allows you to create a virtual card that will enable you to shop at any virtual or in-person store accepting Visa cards. It also offers a physical BNPL debit card. At the same time, the maximum 30% Affirm interest rate is relatively high; however, BNPL applications charge simple interest rather than compound interest like credit cards. Affirm also lets you calculate how your claim will affect your total loan cost, which is a plus. And it doesn’t charge late fees.


Klarna is a handy BNPL app that finances purchases in three ways: Pay in 4, Pay in 30, and monthly funding. Pay in 4 divides your expenses into four interest-free payments every two weeks, with the first installment paid upfront.

The Klarna Pay in 30 options is especially notable as it allows users without funds to make an upfront payment to access the BNPL option. Monthly financing enables you to make larger purchases by paying back the amount owed monthly for up to 36 months, albeit with an added interest rate of up to 24.99%.

Klarna has over 400,000 retailers that will let you choose a service at checkout. Still, you can also create a one-time virtual card for online or offline purchases.


Afterpay focuses on mindful spending. Afterpay’s users have an initial spending limit of $600 which slowly increases with responsible payment history. Afterpay also makes up for the relatively high late fees by charging $10 late fees on the first payment.

Afterpay offers only one payment option: four interest-free payments within six weeks, with the first payment prepaid.


Uplift stands out in our selection because it’s a website, not an app. However, it is still worth taking a closer look at.

This BNPL website offers fixed-rate travel loans that can be repaid monthly. Loan terms are determined based on several factors, including credit information and purchase details, and cannot be refinanced.

If you have a lot of credits, Uplift might be an excellent option to beat the high annual interest rates on credit cards (but you’ll be sacrificing the points and miles you could earn with travel or airline credit cards).

What is the future of the BNPL?

All statistics and demand for such an option in our time of crisis suggest that the need for BNPL applications will continue to grow in the coming years. More and more people are looking for ways to manage their spending to avoid potential problems. Since users plan their purchases and pay all payments on time, there is no reason why they cannot use this fintech service.


Forbes notes that BNPLs can benefit both sellers and buyers, as the ability to make multiple payments over time can make a purchase more attractive to buyers and lead to increased sales for sellers.

We at Lightpoint Global have extensive experience in the field of financial services. LP team deliver applications of any complexity: end-to-end banking solution, BNPL, personal finance apps, P2P lending platforms, web application and ML-dashboards. If you have decided to create a BNPL application and enter a market where there is not much competition yet, but there is already huge demand – we are here for you.

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