Buy now, pay later (BNPL) services are platforms that allow you to purchase something today that you then pay back in smaller segments. Think old-school layby meets the digital world - except you don't have to wait to pay in full to get your purchase.
They are integrated into retail payment systems across the globe, and can typically be accessed via apps, the platform’s website or simply at retail checkout.
BNPL services were created to not only help customers on tight budgets take home something today that they then pay in the future, but also help make repaying a purchase more manageable than using a credit card. This is because BNPL providers offer a payment system of interest-free instalments, typically spread out over a number of fortnights.
What you can buy through a BNPL platform is determined by its participating retailers and can range from smaller items like clothing to big-ticket items like furniture and appliances. However, spending caps are typically in place to help reduce some risk to the customer, ranging from a few hundred dollars to tens of thousands on some BNPL platforms.
As credit cards fall out of favour due to their high interest rates and hard-to-meet eligibility criteria (particularly for millennials and Gen Z) the popularity of BNPL services have skyrocketed in recent years.