Hello.
We are accustomed to buying equipment on credit and the existence of interest-free installments, when we can pay the cost of the goods in equal installments over a year or a longer period. BNPL services operating on the “buy now, pay later” or “buy now, pay later” principle have become operational in Russia relatively recently, and not everyone understands their strengths and weaknesses.
Initially, such services appeared in Europe, then they came to the United States, where they almost instantly proved their effectiveness and became an additional financial instrument of interest to both buyers and retail chains. Let’s figure out together how BNPL services work and what they provide in practice.
The name of the services may differ, since they are offered by different banks, and they create partnerships with retail chains, for example, in Megafon retail it is “Yandex Split” and “Denum Pay in installments”. To understand the details, let’s understand the principle of their operation using the example of buying a phone worth ten thousand rubles.
Select a phone, add it to the online store cart, and then click on payment in installments. The first payment will be 2,500 rubles, subsequent payments will be exactly the same, pay every two weeks. There are no overpayments, you receive the goods immediately.
The difference from credit products is immediately visible: you do not need to enter into a loan agreement or obtain the approval of the seller or bank. For many buyers, lack of credit is a key factor. And the procedure itself is simplified as much as possible – just indicate your phone number and link your bank card or e-wallet.
For retail stores, BNPL services are interesting because they expand the audience of customers and remove barriers such as the need to apply for a loan or installment plan, or provide passport data. In fact, the only difference from a regular purchase is that the buyer does not pay the entire amount at once. The service is convenient for emotional or, on the contrary, long-planned purchases that are constantly postponed due to lack of free money.
It is important to understand that BNPL usually lasts up to two months. As soon as the term is extended, the product is converted into a kind of loan and is no longer a typical BNPL, although it is often not necessary to provide documents either – these risks are assumed by the bank that created the service. For example, in the same Megafon you can buy goods worth up to 150 thousand rubles, which makes it possible to purchase very different equipment.
Interestingly, such a high BNPL limit has created a rather interesting pattern for wealthy buyers who, in practice, can buy goods without using the BNPL service, but use it with all their might. The reasoning here is as follows: with high deposit rates at 18% per annum, it is easier to place money in banks at this percentage and buy goods without paying 100% of their cost.
Considering that BNPL services are available for paying for food, and in a number of retail chains you can pay for goods in this way directly at the checkout, this turns out to be a convenient option for everyone who wants to play smart: high-interest deposits bring income, and savings on shopping, spread over a couple of months, allows you to gain time. It is clear that this is not yet the main group of consumers of BNPL services, but it is being formed.
Let’s take a look at the statistics of purchases using BNPL, there is fresh data from Megafon:
“Customers of the combined retail network of Megafon and Yota most often pay for smartphones in installments – they account for almost a third of all BNPL purchases, while a year earlier the figure was 22%. The share of payments in “parts” for smartphone accessories is 21% versus 18% a year earlier. Next comes equipment setup—it accounts for 17% of goods and services purchased via BNPL. Equipment setup services may include installing the necessary applications on a smartphone, connecting smart home devices, or gluing protective films to the screen.
In addition to smartphones, where Apple products are among the leaders (+19% in units and +43% in money), this year Russians also liked to pay in installments for tablets. Thus, in January-September 2024, 12% more tablets were purchased using the BNPL option than during the same period in 2023. In money terms, this figure increased by 14%.”
Pay attention to an important detail in Megafon’s statistics: the share of payments using BNPL for both accessories and services is growing. And here we can consider a very simple scenario: the buyer often chooses a product of greater value in the store, and transfers additional costs to the future, stretching them out. Both retail and the consumer, who can purchase a higher level product, benefit.
For a responsible person planning a purchase, this payment method is definitely beneficial, but are there any pitfalls for the unpaid portion of the goods? The contract states that in case of partial non-payment of goods, interest will be charged on the remaining amount. For a BNPL service, this is a way to reduce your risks, but I would like to emphasize that since there is no credit agreement, if for some reason you do not pay for the purchase on time, this will not affect your credit history in any way, and your credit rating will remain the same. The interest will have to be paid to the bank in any case. For retail there are no risks here, since the goods were paid for by the partner bank.
In the offers of BNPL services, you can see large limits on purchases, but they usually require additional documents (passport or profile on State Services). Please note that in this case you have a regular installment plan or a consumer loan: such data goes to the credit history bureau, and the registration may look simple, but the interest for using the service is specified within the agreement. And here the question arises, what is more profitable in this case – installment plans or BNPL service? In my opinion, these tools are not direct competitors; each of them covers its own niche and complements the other. In any case, you will need to arm yourself with a calculator and spend five minutes to evaluate for yourself the benefits of this or that offer.
It would not be a bad idea to talk about returning the product if something happened to it. There are no additional slingshots in BNPL services – refunds occur as standard, as if you had purchased it at full price. In this case, the funds you spent are returned to the card with which the purchase was paid.
The availability of a variety of financial instruments to retail players allows them to increase sales, as they meet the needs of completely different groups of customers. This is also convenient for consumers, since they can plan their budget and choose how to pay for the goods.
Today in Russia there are a variety of options: from full payment for a purchase “the old fashioned way” to choosing a BNPL service, credit or installment plan. And this financial room for maneuver supports the retail market and buyers. It’s a rare situation when literally everyone involved wins.
I have repeatedly seen BNPL services contrasted with other tools, but I cannot agree with this assessment. Everyone has their own niche and it is impossible to say that only one of the tools is definitely beneficial. It all depends on the buyer, his needs and capabilities.
Have you tried BNPL services? What do you think about the convenience of payments and goods registration? What is your favorite way to buy expensive things?
Source: mobile-review.com
