BNPL : A NEW CONCERN
IN E-COMMERCE

By Abduraheem Padinhare

BNPL : A New Concern in E-Commerce

BNPL (Buy Now Pay Later) service is an installment loan that effectively handles and allows to pay by several equal installments for any purchase which is appealing and attracting the customers to purchase goods and services on the basis of their preferences. But sometimes you need to upfront certain amount whereas the other services just give a chance to simply check out and pay.

BNPL Services are making more convenient and transparent kind of fund transactions compared to the credit cards which is increasing the popularity and demand day by day which creates the new future of digital payments worldwide in a short span of time which accelerates the e commerce among the customers more in the age limit between twenties and thirties.

BNPL acts as a channel between the purchase needs and necessity of customers with extended time or payment for their purchase without any interest or fees.

The idea of BNPL Payment flourished and widely spread at the time of pandemic while financial insecurities and crisis were uprooted while platforms like Tabby, Spotti, Postpay, Tamara, Cashew Payments, Aramex Smart, Rise and Afterpay by offering flexible instalment plans and lower interest rates which makes the customer more accessible to the online platforms in UAE.

REGULATORY CONCERNS IN DETAIL

  • Lack of customer understanding of credit risks:

    • Some customers will not be fully aware of or without thought of the risks behind such payment methods after purchasing the products when it comes in the matter of repayment of the credit amounts.

  • Showcasing BNPL as a default payment option:

    • BNPL shows as a default payment method in the merchant’s website which leads the customers easily to choose it without thinking much or un aware of its risks later on when they find it easy as it in the initial stage.

  • Inconsistency over spending limits:

    • No standard spending limit set for the BNPL regime, causing inconsistencies, and potentially leading to overspending by customers.

  • Lack of clarity on consequences surrounding non-payment:

    • No enough information provides about the consequences of the nonpayment of the credit amounts to the customers. Certain situations fees or charges will be there for cancellation, missed or late payments more than the amount of the product once purchased

  • Not solely in the interest of customers:

    • Designed as Merchant friendly rather than customer friendly.