Platforms offering “buy now, pay later” (BNPL) services facilitate immediate purchases with deferred payment schedules. These services, exemplified by Zip and Afterpay, allow consumers to acquire goods or services and remit payment in installments, typically over a few weeks or months. A user might, for instance, purchase clothing online and opt to pay for it in four bi-weekly installments rather than a single upfront payment.
The significance of these financial tools lies in their ability to increase purchasing power and provide budgeting flexibility, particularly for consumers who may not have immediate access to credit cards or prefer predictable payment plans. Historically, installment plans were primarily offered by individual retailers. The advent of dedicated BNPL platforms has democratized access to this payment method, making it widely available across a multitude of merchants and industries. This has fueled both consumer spending and merchant sales growth.
