With a population size of 1.4 Billion, it is a sort of great imbalance that only 3% of the Indians holds credit cards currently. Now, there are various reasons to why the ratio of credit card holders in India is so much abrupt. For starters, it is the requirement by Credit Card companies that only the people of higher income slab (as mentioned by them) are eligible for credit cards. Further, there are several other reasons, which prevents the majority of the Indian population to hold credit cards. Now, this is where the ‘Buy Now Pay Later (BNPL) Apps’ comes in to play!
The BNPL Apps have become extremely popular in India within a very short span of time. Well, there are various reasons that makes the BNPL Apps so popular and now a necessity too for many of the people. Firstly, the BNPL Applications do not asks for any Collateral from their users. Further, people coming under any income slab, be it even lower are accessed with the loan amounts. In short, it is extremely easy to get loans from BNPL Apps and more importantly, almost anyone can avail this facility. Undoubtedly, many of you who are reading this article might be a regular user of the BNPL Apps too and if you are so then we have some big news for you.
Now, things may look incredible with the functioning of the BNPL Apps however, they are not as friendly to the customers as they seems. In fact, with the entry of the ‘Chinese BNPL Apps’ things have worsened for the Indian Customers seeking loan. Before going ahead, let me mention that the purpose of this article is not to create any panic among the BNPL App users rather it is just for their own caution. If you are regular user of the BNPL Apps then you need to take some preventive measures and use these BNPL Apps only when it is a matter of extreme necessity and when you are sure that you can make a repayment on the scheduled date. Moreover, through this write-up we would advise you to rather use the ‘Credit Cards’ instead of depending upon the BNPL Apps!
Well, with the extensive use of the BNPL Apps there are not just a few but several ‘Alarming Aspects’ for the users. Therefore, we are going to have a look over a list of some potential disadvantages of the Buy Now Pay Later (BNPL) applications –
1) Higher Interest Rates: Some BNPL applications charge high interest rates on unpaid balances, which can make the cost of the item much more expensive than if it were paid for upfront.
2) Credit Risk: BNPL applications may be seen as a form of credit and can negatively impact credit scores if payments are not made on time!
3) Temptation to Overspend: The convenience and flexibility of BNPL applications can make it easy to overspend, especially for those who are prone to impulse buying.
4) Limited to Certain Merchants: BNPL facilities are often offered only by certain sections of the merchants. Therefore, the consumers may not be able to use the service of BNPL at all the other necessary retail points!
5) Late Fees: If payments are not made on time, late fees can be added to the balance, increasing the overall cost of the purchase.
6) Lack of Transparency: Some BNPL applications may not clearly explain the terms and conditions of the service, leaving consumers confused about the costs and terms of the service!
7) Limited to Certain Items: Some BNPL applications may only be used for certain types of items, such as clothing or electronics, which limits consumer options.
8) Limited to Certain Countries: Some BNPL services may not be available in certain countries, which can make it difficult for the consumers to access all the services, across the globe!
Written By NEEL PREET – Author of the Books, Voice From The East (2016); Journey With Time Place And Circumstances (2018) & Indian Defence Files (2021).
