Buy Now, Pay Later (BNPL) is a type of short-term financing that allows consumers to make a purchase immediately and pay for it in fixed installments over a set period, often without interest.
BNPL is offered as a payment option at the point of sale (PoS), typically online, and is an alternative to traditional credit cards or personal loans for financing purchases.
Payment to Merchant: Once approved, the BNPL Provider pays the Merchant the full purchase price upfront, minus a merchant fee (which is typically higher than standard credit card processing fees, often 2% to 8%).Repayment: The Consumer repays the BNPL Provider in installments. The most common plan is "Pay in where the purchase is split into four equal, interest-free payments over six to eight weeks, with the first payment often due at checkout. Longer-term plans may include interest.Instant Approval: The BNPL provider runs a rapid, typically soft credit check (which usually doesn't affect the consumer's credit score) and approves the loan…