In contrast to credit card applications, buy now, pay later does not necessitate a credit check. Instead, these programs use algorithms to perform "soft" credit checks to determine a shopper's eligibility.
To put it another way, buy now, pay later loans are aimed at low-income, tech-savvy Gen Z and millennial consumers to encourage better financial inclusion.
However, existing consumer credit laws do not apply to buy now, pay later programs due to their novelty. The absence of regulations exposes consumers to the financial risk of accruing greater debt.
The "Buy Now, Pay Later" (BNPL) digital payment solutions have overtaken the industry as the digital lending sector grows internationally.
The BNPL market has grown significantly in recent years and is expected to exceed USD 760BN in 2025, according to Kaleido Intelligence BNPL Survey.
The pay-over-time solution, ease of accessibility, and speedy onboarding process of customer-facing brands drive widespread adoption and rising average cart values.
For those with more stringent budgets, the option to spread out installment payments over time rather than incur a large upfront cost is appealing. Customers may find this convenient, but lenders take on additional risks.
Real-time AI offers a powerful toolbox for businesses in 2024, promising significant improvements in customer experience, operational efficiency, and data-driven decision-making. By harnessing its potential, companies can gain a competitive edge and thrive in the market.
