Buy Now Pay Later (BNPL) has been a buzz in recent years for its ability to allow consumers to purchase goods and services and repay that purchase over time as a form of income smoothing. It allows a customer to benefit from a purchase straightaway without having to pay the full amount upfront, instead making payments in instalments at regular intervals going forward.
BNPL, however, has come under increased scrutiny recently due to the fact that it encourages reckless purchasing behaviour and can ultimately end up costing you significantly more if you miss your repayment schedule, which in turn further damages your credit score rating. Due to the perceived ease with which you can make a purchase, individuals are overspending on items they would not have bought or needed if BNPL solutions didn’t exist. It is creating a false economy and with an economic downturn on the horizon, those fractures will continue to grow in addition to the increased regulatory scrutiny that is coming down on BNPL solutions.
Set against this backdrop, it is not surprising to see a shift towards more conventional wisdom namely that of Save Now Buy Later (SNBL). Here the idea is that individuals should indeed save up their funds to make big-ticket purchases rather than utilising Buy Now Pay Later solutions. The aim is that it encourages financial discipline, prevents a debt spiral from occurring and ensures that customers really think about their purchases in advance of making them, ensuring that they are precisely what they need and not a spur-of-the-moment reckless decision facilitated through BNPL.
Tied in with brand loyalty and merchant discounts, Save Now Buy Later is increasingly becoming a welcome counterweight to the over-exuberance of BNPL and encourages a much more robust framework for financial health and discipline. Apps help users set goals and help them get there with useful tools breaking down the saving goals into bitesize sub-goals.
It is great to see new FinTech solutions taking a different approach to help their customers. Rather than focus on encouraging expenditure, which ultimately comes to the detriment of the end-user, FinTech companies are now re-aligning themselves to their original mission statement of bringing an overhaul to traditional financial services and putting the needs of the customer at the forefront of their product, exercising due care to ensure they are acting in their best interests.