Credit Cards
BNPL
Interest-free if paid in full each month, consumer funded
Late fee on missed payments
Issuer charges compounding interest on any debt rolled over
Eligibility assessed once up front
Users can continue purchasing as long as they make minimum payments
Interest-free, merchant funded
Late fee on missed payments, with overall fee capped
No incentive (or mechanism) to roll over customers’ debt
Eligibility assessed before each purchase
Defaulting users barred from further purchases
Considerations
Key merchant benefits
Key customer benefits
Business model
Considerations
Key merchant benefits
Key customer benefits
Business model
Considerations
Key merchant benefits
Key customer benefits
Business model
Considerations
Key merchant benefits
Key customer benefits
Business model
Ability to manage finances and unlock purchasing power
Ubiquitous and established
Flexible borrowing duration
Rewards and cash back
Responsible use helps build
credit score
Refunds/Section 75 protections
Saved interest and structured payments
Ability to manage finances and unlock purchasing power
Digital user experience and customer service
Instant credit decisions
“Try before you buy”
Merchant discounts
Transparent and easy to understand
Widely used across online and physical channels
Typically lower fees
Reliable
E-commerce sales
Enhanced conversion
Lift in average order value compared
with debit cards
Leads, traffic, and comarketing
Data and customer insights
Hidden fees and high APRs
Users permitted to keep rolling over
and increasing debt
Impulse purchasing risk
Providers unable to share credit information with each other and other lenders
Higher incidence of missed payments
Impulse purchasing risk
Source: Bain & Company
Figure 23
How buy now, pay later stacks up against credit cards