Do you actually need the purchase now pay later playing cards?

The rise of fintech firms over the past two years has given a lift to digital lending, which in flip has resulted within the rising recognition of the Buy now Pay later (BNPL) scheme. BNPL playing cards like Sliceit, Postpe, Uni, or Lazypay, aside from serving those that are typically not eligible for bank cards, have additionally emerged as new challengers to conventional bank card firms. So, what are the advantages or problems with a BNPL card in comparison with credit playing cards, and are they price your time?

Credit line v/s bank card

BNPL playing cards are usually not technically bank cards however a credit score line that may be seen as short-term client loans. Such loans are typically supplied by an NBFC, whereas a fintech firm manages the interface. So, one will discover the title of the NBFC within the CIBIL report as an alternative of the fintech firm/model. Besides, there’s a third participant: the financial institution that points these playing cards, as fintech firms can not accomplish that on their very own because of RBI rules. In case of a bank card, there’s typically just one occasion, which is the financial institution that manages the interface, distributes the credit score, and points the cardboard to shoppers. This ensures a single level of contact in case of any question from the shopper. However, for BNPL playing cards, one might must cope with the NBFC along with the fintech firm for any queries.

Target viewers

BNPL playing cards goal individuals who don’t have any credit score historical past to be eligible for bank cards (typically a youthful viewers) and so the monetary threat concerned right here is extra. Credit card issuers typically goal a working inhabitants which has good credit score historical past and so their dangers are a lot decrease.

Joining and annual charges

BNPL playing cards don’t often have any becoming a member of or annual charges. When it involves bank cards, many fundamental and intermediate playing cards don’t cost such charges. Almost all premium playing cards (specifically way of life playing cards) have becoming a member of and annual charges which could be whilst excessive as ₹50,000- 60,000 plus 18% GST. BNPL playing cards additionally give beneficiant cashback affords to its customers for spending on Zomato, Swiggy and Uber. Recently, Slice gave 10,000 cashback on Apple merchandise as a promotional supply. Apart from these, many of the BNPL playing cards will let you pay in elements as an alternative of 1 full fee. Uni card offers a cashback of 1% if the mortgage is repaid in full as an alternative of in instalments.

Credit playing cards give rewards in 3 ways: cashbacks, reward factors, and air miles. Cashback playing cards like Axis Flipkart and ICICI Amazon pay give 5% cashback for purchases on Flipkart and Amazon, respectively. Axis Flipkart additionally offers 1.5% cashback in case of no-cost EMI purchases, whereas IDFC playing cards and Axis Ace give cashbacks within the vary of 2-2.5% on virtually each transaction. Many premium playing cards give reward factors that can be utilized to buy merchandise, ebook flights or resort rooms. Cards like HDFC Infinia, Diners Club Black, and SC Ultimate return 3.3% on most such transactions. Then there are playing cards like SBI Etihad or Axis Vistara which give larger returns (principally greater than 10%), notably to frequent flyers, within the type of air miles. When it involves rewards and advantages, bank cards are at the moment miles forward of BNPL playing cards.

Credit interval

Most BNPL playing cards permit customers 3-5 days to pay their month-to-month credit score payments (Uni, being an exception, offers 10 days), whereas most bank cards give 12-18 days to settle any month-to-month dues. Due to such very brief credit score interval, the possibilities of an consumer lacking the due date are increased within the first case, whereupon they must pay late fee charges and curiosity prices. One main challenge with virtually all BNPL playing cards is the close to lack of privateness for the shopper. Most of those corporations ask for entry to contacts, SMS, and metadata data of all apps put in on the customers’ units aside from the same old information like location and KYC particulars. These extra permissions to entry delicate information like contacts are usually not typically required for bank cards issued by banks.

Grievance redressal system

In case of bank cards, banks are a single level of contact for any grievance and their grievance redressal system is on the market 24*7. With BNPL playing cards, many shoppers get caught between the fintech and NBFC corporations.

Conclusion

BNPL playing cards are a brand new phenomenon, however the disadvantages outlined above outweighs any advantages.

Kashif Ansari is an assistant professor at Hansraj College, University of Delhi.

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