alt Hacker NewsWhat is the functional difference between BNPL and credit cards that can explain why it’s become popular? A credit card is literally “buy now pay later” so is it just the ease of onboarding?
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A credit card is for gaining access to the electronic payment monopoly's network[1]. BNPL is explicitly a loan. Yes, a credit card transaction may effectively turn into BNPL if you fail to complete your end of the transaction in a timely manner, but that is a hindsight outcome, not the reason for choosing the method in the first place.
[1] Nowadays you can often also use the network with other methods, like a debit card, but those alternatives still aren't universally accepted like credit cards are.
BNPL is 0% interest over N months. A credit card is 20% APY over the total balance over minimum payment. And it's offered by my CC providers.
For some larger purchases on a 12 month plan, leaving the money in savings loses me 1.5% cash back but gains me around 3% interest (after accounting for the depleting principle).
It would be stupid not to do it sometimes. I don't really get the financer's benefit. Though maybe it's because I do pay it, and if I didn't there would be 200% APY or something.
Fixed payment schedule and no interest being charged.
- No application process. You are at a store's checkout page or sales kiosk and can sign up in a couple of clicks.
- No credit checks.
- Longer payment period - usually 2-3 months with no interest.