Fintech Basics: What is Buy Now Pay Later (BNPL) ?

Fintech Basics: What is Buy Now Pay Later (BNPL) ?

by August 17, 2023

Ever wondered what is buy now pay later? Imagine walking into a store, picking up a gadget or designer outfit you’ve been eyeing, and taking it home immediately without paying the full price upfront.

This isn’t a shopper’s fantasy; it’s the reality of Buy Now Pay Later (BNPL), a payment method reshaping how we shop.

With BNPL, that aspirational purchase isn’t a distant dream anymore. It breaks down the total cost into smaller, manageable payments, letting you enjoy your product now. At the same time, you pay over time—no hefty credit card bills, no complicated bank loans, just simple, convenient instalments.

But how exactly does it work? What is Buy Now Pay Later? Who offers these services? And what are the potential pitfalls you should be aware of?

What is Buy Now Pay Later (BNPL), and how does it work?

At its essence, the “what is buy now pay later” question is easily answered. It’s a model that allows shoppers to acquire goods and services without immediately paying the total cost upfront.

Unlike credit cards that often come with interest rates and extended repayment schedules, BNPL programs offer short-term loans characterised by fixed payments and zero interest charges.

This unique feature enables individuals to distribute their payments over a predetermined period, making larger purchases more manageable for their budgets.

The mechanics of BNPL are straightforward. Consumers can select this payment method during checkout when shopping online or in stores that offer BNPL options.

Upon approval, they make a modest initial payment, typically around 25% of the total purchase amount. The remaining balance is then divided into equal instalments over several weeks or months.

These instalments are automatically deducted from the buyer’s bank account, debit card, or credit card, ensuring seamless and hassle-free repayment.

Distinguishing features from credit cards

A significant point of departure between BNPL and traditional credit cards is their approach to interest. Credit cards commonly impose interest charges on unpaid balances carried over from one billing cycle to the next.

While some credit cards might offer introductory 0% annual percentage rates (APRs), these promotions are typically temporary.

In contrast, most BNPL platforms function without interest or additional fees. This predictability in repayment allows consumers to plan their finances more effectively, as each instalment remains consistent throughout the repayment period.

Some popular Buy Now Pay Later (BNPL) platforms in APAC

  1. Atome: Launched in Singapore in 2019, Atome has grown to become one of Asia’s largest BNPL platforms today. With partnerships spanning multiple countries and industries, Atome offers consumers a vast choice of shopping choices.
  2. ShopBack: Based in Singapore, Shopback allows shoppers to divide their bills into three interest-free instalments, making larger purchases more accessible. ShopBack has also acquired hoolah, a buy now pay later platform in November 2021, to offer users more rewards and payment options.
  3. Akulaku: Originating from Indonesia, Akulaku began as a virtual credit card provider but has since expanded its services to include an e-commerce platform, wealth management, and peer-to-peer lending.
  4. Cashalo: An offspring of the Hong Kong-based fintech Oriente, Cashalo is a consumer finance platform in the Philippines. Its PayLater system offers flexible credit lines for various consumer needs.

Pros and Cons of Buy Now Pay Later


  1. Convenience: BNPL offers a convenient way to make purchases over time, avoiding the need for upfront payments.
  2. Low or No Interest: Many BNPL programs have lower interest rates than credit cards or even offer interest-free terms.
  3. Accessibility: A high credit score is not always necessary, making BNPL accessible to more consumers.
  4. Swift Approval: The approval process for BNPL is often faster than traditional credit applications.


  1. Tracking Payments: Keeping track of multiple BNPL payments can be challenging, leading to confusion or missed payments.
  2. Late Fees and Credit Impact: Missing or delayed payments may result in late fees and potential damage to one’s credit score.
  3. Lack of Rewards: BNPL programs usually do not offer rewards or cashback incentives, unlike credit cards.
  4. Continued Payments: Even if an item is returned, ongoing payments may still need to be made until the balance is settled.

BNPL has emerged as a game-changing solution in consumer finance, prompting many to ask, ‘What is Buy Now Pay Later, and how can I use it?’  By offering flexibility, convenience, and the chance to avoid interest charges, it caters to the modern shopper’s preferences.

While its benefits are evident, responsible usage and careful management are essential to prevent potential pitfalls. Spending within your means and being vigilant about payment dates is always advisable to maximise BNPL options.


This article is a part of Fintech Basics, a new series exploring the emerging concepts that are innovating finance and technology and bridging them for everyday use.