HOW BNPL APPLICATIONS ARE RESHAPING CREDIT CARD USAGE

Abstract

Money is an important factor in satisfying economic needs. To achieve this satisfaction, it is necessary to be working or to have income from any source. Sometimes consumers need more money to meet their needs. The BNPL system also offers a FinTech loan with zero interest and installment options to meet consumers’ financial needs. BNPL derives a large share of its revenue from retailers. Companies prefer it to increase their trade volume because some earn higher profits by charging commissions on BNPL transactions. The most important thing that distinguishes BNPL loans from other credit cards is that they perform no or limited credit checks and do not report a negative payment history to credit bureaus in case of payment failure. BNPL transaction volume has increased significantly over the last decade, especially as people spent more time at home during the COVID-19 pandemic. The high interest rates on traditional credit cards and the variability of those rates have been a major factor in consumer turning to BNPL system.