A popular digital solution know by the name Buy now Pay later ( BNPL ) is trending and helping the consumers to ensure that they can still make the ends meet in this restriction times the Covid pandemic has brought to the household incomes across the world. The search of liquidity was also elevated during the end of the first quarter of last year and it is likely to remain so throughput 2021. Banks have been keen in providing the digital solutions like BNPL to overcome the liquidity shortages. The plans runs something like this- Allowing the consumers to pay for goods and services in instalments over an agreed time period, rather than as an upfront lump sum as is normally the case, customers who may be under financial pressure can continue to buy their usual products, take possession of those products for immediate use but divide their payments into smaller instalments that are billed to the customer’s chosen account at later dates. Some schemes give customers up to 12 months to make the payments while others allow a window of 30 days only.

Byas Nambisan, chief executive officer of an Indian payments-solution firm, Ezetap Mobile Solutions, that processes BNPL transactions, told Bloomberg in November that, “The general feeling we’re getting from merchants is that people are preferring to buy things on pay later options. Even brands selling these products could be using the pay later scheme to push out old stock, before launching something new. This goes beyond the festive season trends.” And a recent study by PYMNTS.com and PayPal based on two surveys consisting of separate groups of respondents totaling almost 15,000 US consumers completed from March to September of last year, found that BNPL adoption was markedly on the rise in 2020, “Buy Now, Pay Later: Millennials and the Shifting Dynamics of Online Credit”.

The third-largest US card firm with 62 million accounts in the US alone plus additional accounts in Canada and the United Kingdom stated in December that it would no longer allow transactions identified as point-of-sale loans to be charged on its credit cards, regardless of the point-of-sale lender. “These kinds of transactions can be risky for customers and the banks that serve them,” a company spokeswoman stated. Nearly two-thirds (62 percent) of this group, moreover, said BNPL led them to spend more than they would have otherwise, which only further underlines the risks associated with this payment facility. The Capco study showed that 54 percent of the consumers’ surveyed felt BNPL products should be regulated, while 52 percent believed providers should consider their credit histories before approving financing and also UK consumer attitudes to BNPL and polled more than 2,000 individuals across four age categories between 18 and 65+, found that 50 percent of respondents aged 18 to 34 have missed a BNPL payment.

“Buy Now Pay Later providers are predicted to double their market share of online purchases within the next three years. However, with BNPL coming under increased regulatory scrutiny, plus the ongoing economic fallout of COVID, there are questions to be asked about the future trajectory of BNPL in the UK, and what opportunities exist for established banks to make in-roads in this sector.” Mike Ethelston, managing partner at Capco UK, told fintech newswire Finextra Research in November.

 The PYMNTS.com and PayPal study, for example, found that of those millennial consumers who had not previously used BNPL, nearly 40 percent expressed interest in using it should it become more widely available in digital wallets. Considering all demographics, the share of potential users willing to pay through installments were three times more than the 6.4 percent of consumers who currently use BNPL plans.