You are surfing Instagram and your eyes are met with a pair of shoes that make you fall in love for so long. Fit how the color of the shoes is also extremely matched with the dress you prepared for your best friend’s small wedding. After a light click, you know the price of the shoes is a bit expensive compared to the account balance. Not to mention this month is the month of wedding, month of shopping, … the expenses will increase quite a lot.
But oh no! This shop allows to buy first and pay later. If you agree, you can have your dream shoes immediately and pay after 4 installments, 1 million VND each. What, 1 million, you have right away and quickly put down money to “enjoy this moment” of shopping immediately.
That is the simplest example of pre-paid post-payment – the payment trend is very popular in the world and appeared in Vietnam. It sounds very simple and profitable for consumers, but the truth is not certain.
What is pre-paid post-purchase?
No need to explain much because the name says it all, buy now, pay later (BNPL) is buy first and pay later. Specifically, your shopping bill is divided into smaller parts and you will pay it within a certain time/number of times, most of which falls within a few months. This model is usually done through a 3rd party – the lender. That is, shops or brands are affiliated with 3rd parties, so in fact, customers are borrowing money from the unit to buy goods from the shop.
Sounds similar to installment payments, but currently in Vietnam, installment payments mostly apply to things of great value such as phones, computers, motorbikes, etc. Meanwhile, BNPL focuses on the segment. goods of not too high value such as shoes, clothes, sofa sets, … several million seven million.
Another point similar to 0% installment, BNPL does not charge interest on customer loans and if you pay late, you will have to pay a penalty fee or quite high interest, depending on the item.
The reason why BNPL is a new trend is because it is developing quite strongly in both domestic and foreign markets. According to a study by Adobe Blog, in the first 2 months of 2021, the rate of using BNPL packages in the US increased by 215% compared to the same period last year. In Vietnam, in the past few years, a series of BNPL apps have appeared such as Fundiin, Litnow, PayLater, Movi, WowMelo, Ree-Pay,…
What can be bought with BNPL?
A shiny iPhone for 24 million will belong to you immediately with 4 installments, 6 million each.
A tour of Phu Quoc (in case the epidemic situation is positive) 4 days 3 nights with 10 million will also be within reach if you agree to pay in 5 times, 2 million each time.
Or a pair of 4 million shoes as the first example…
So it is not wrong to say that one can buy anything with BNPL after being seduced by attractive offers. Some of the popular items of BNPL can be mentioned such as fashion, cosmetics, furniture, home exercise equipment, electronics, airline tickets, skills courses, … and even Even food bills when going to the supermarket.
The reason why BNPL is increasingly popular
It is no coincidence that BNPL has become such an expanding trend. In fact, there are many reasons why many people, especially young people, indulge in pre-paid purchases later.
First of all, the product variety. As mentioned above, BNPL applies to everything, not necessarily big value items like today’s installment purchases.
Second, BNPL satisfies the “I want it right away” mentality of shopaholics. If before, you had to hesitate to buy a branded shirt or a good pair of shoes, now with only 1/4 or 1/5 of the value, you have them in hand.
Third, BNPL is simpler and easier to get credit than credit cards. If you want to open a credit card, you will need to meet strict requirements such as paying salary via bank, collateral, … then BNPL users only need a few steps to verify customer information via the identification card. The lender’s electronic customer list is done.
The fourth is modernity, suitable for online shopping trends. These service providers all use apps, so with just one smartphone – the inseparable object of young people, anyone can comfortably buy first and pay later.
Is BNPL eroding your wallet?
I don’t know if you spend more money or not, but BNPL certainly doesn’t make you spend less. Because both the shop and the lender will benefit when you spend more, they will certainly want customers to use their services more.
Afterpay, one of the most popular apps in the world during the BNPL wave, said that using its service increased purchases by 20%. Similarly, Klarna – a relatively popular BNPL unit in European countries, reported a 30% increase in purchases. These statistics mean that people shop more when using prepaid postpaid.
A real-life example can be this, you are shopping online and see that you will buy item A for 2 million but only have to pay 500k immediately. So you immediately think about buying more item B with the same number. This is the source of empty wallets, short account balances.
Regardless of the shopping or payment trends, there are certain advantages and disadvantages, and BNPL is no exception. No matter what trend or trend you follow, the important thing still lies in the way each person spends and buys. So be a sober consumer!