Buy Now Pay Later and the Rise of Installment Buying

by Starry

Mar 22 2021

The reliance on digital payment options has only increased in the past year and is growing rapidly. Thus, it makes sense why both customers and businesses are speedily adopting alternative payment options like BNPL(Buy Now Pay Later) plans. But this increasing reliance is also leading to a rise in the culture of installment buying. Read on to find out about BNPL services and their role in the rise of installment buying.

Increasing usage of e-commerce payment methods

No one could have predicted the kind of momentum e-commerce platforms will be able to garner in such a short span of time. E-commerce giants like Amazon have become synonymous with online shopping for many people around the globe. More people are shopping online now than ever and a huge chunk of those customers are buying from well-known e-commerce websites. This means that these platforms have a lot of leverage in terms of impacting and shaping consumer behavior and trends. 

Adoption of BNPL by E-commerce platforms

Given the leverage that e-commerce platforms have in terms of directing customers towards certain trends, they clearly have played a role in popularising BNPL services among their loyal audience. By embracing BNPL services, e-commerce platforms have given these services direct access to their existing user base, which is massive. As a result, BNPL services are experiencing a huge spike in popularity. E-commerce platforms, on the other hand, are also taking ample advantage of the additional sales that BNPL plans are bringing.

With the rise of new BNPL services, the traditional stronghold of banks and financial institutions in the domain of financing is also beginning to tremble a bit. New entrants in the market are cutting into the conventional market of financing( banks or financial institutions), while also shaping consumer sensibilities in the process.

Rise of installment buying

The biggest UPI of BNPL plans is that they provide lending to customers where they need it, at the point-of-sale. Say you are shopping on an e-commerce website. You have your cart ready and you are just about checkout, but you are hesitating because you have added a lot of items and your cart is looking expensive. Now you are considering abandoning your cart, but what if you do not have to pay the full amount right now. How about if you can split the cost of your cart into equal monthly, interest-free installments, and pay over an extended period of 6 or 8 or 12 months. This will surely influence your decision-making. You are now more likely to complete the checkout and purchase the items that you were previously thinking of leaving behind. This tendency of customers to buy stuff in installments is known as hire purchase.

BNPL options are certainly impacting customers, shaping their payment preferences and buying behavior. With BNPL options so readily available on sites where people prefer to buy things, people are becoming more prone to installment buying. 

What makes installment buying attractive to customers?

There are a number of different reasons why customers are prone to show installment buying behavior:

  • First and foremost, BNPL plans are quite savvy in the way they present and structure their payment model. The model, essentially, allows the customer to purchase a certain product and pay in two or four equal installments. The whole model is pretty simplistic and transparent.
  • These installments are paid automatically, which further underlines the ease and convenience of using this payment model. After all, you do not have to keep a schedule or remind yourself of paying the installments on time. It is great that the due payments are automatically deducted from your account, and therefore, you do not have to worry about missing or delaying a payment installment. These installments are usually paid using your debit card.
  • Another selling point of these plans is that most of these plans charge zero interest from the customers. Even the penalty for missing or delaying payment, in some cases, is quite low. The prospect of purchasing something without having to pay in full immediately, and then having no interest on deferred payments as well, is a highly lucrative prospect for customers. It makes sense, therefore, that many customers indulge in instalment plan through these BNPL plans.
  • BNPL plans cleverly detach the act of buying from the act of spending money. This delays the pain that a customer would experience while parting from their hard-earned money. As a result, the customer is more likely to go forward with the purchase.


The increasing reliance on digital payment options and e-commerce platforms for shopping has allowed BNPL services to enter and take root in the market. Now, these services are spearheading the shift towards installment buying.   The trend already is on the rise and is growing around the globe. Both customers, as well as e-commerce platforms, are benefiting from these alternative payment options, which is why installment buying seems like a trend that is here to stay.

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