Have you used Buy Now Pay Later but forgotten to make timely repayments? Defaulting on BNPL repayments is the last thing you may want to have on your credit report. Buy Now, Pay Later or BNPL schemes have fast gained popularity among new-generation online shoppers. As young consumers switched entirely to online shopping during the pandemic, this scheme has set its footprint among a large set of consumers.
How big is the BNPL market?
To cater to the rising demand for online convenience by young shoppers, many banks and lenders in association with ecommerce platforms launched the BNPL scheme. This is especially available and used during festive season shopping. A vast majority of borrowers can enjoy the short-term credit facility offered by BNPL without even having a credit history.
Why is BNPL useful for young and new credit users?
A credit score is a reflection of one’s creditworthiness and it shows how disciplined a borrower is when it comes to repaying borrowings. Most traditional banks and lenders rely on credit score information before granting a conventional credit facility such as a loan or credit card to borrowers.
However, those who are New-To-Credit (NTC) and who have never taken any form of loan or credit card may not have any credit history. This makes it difficult for lenders to assess the applicant’s creditworthiness. Therefore, such borrowers can rely on options like BNPL since it does not require any credit history or score.
What happens if I don’t pay the BNPL?
Most BNPL scheme providers offer a time period of 15 to 30 days for borrowers to make repayments. However, if you miss these timelines, you could be charged late fees in the form of penalties. Here are the details of late payment charges of some BNPL platforms:
- Simpl
If a repayment towards BNPL isn’t made within the due date, this platform will charge a late penalty fee of up to Rs. 250 along with applicable taxes (GST).
- ZestMoney
If you miss paying an EMI towards ZestMoney’s BNPL, it will charge up to Rs. 250 plus 1% per day as a penalty.
- Amazon PayLater
Amazon PayLater late fee charges for defaulting on BNPL are mentioned in the table below. This BNPL platform expects payments to be made by the 5th of the month:
| Payment amount | Late fees |
| <= Rs. 200 | 0 |
| >Rs. 200 <= Rs 1,000 | 100 + 18% GST |
| >Rs. 1,000 but <=Rs. 5,000 | 200 + 18% GST |
| >Rs. 1,000 but <=Rs. 5,000 | 200 + 18% GST |
| >Rs. 1,000 but <=Rs. 5,000 | 200 + 18% GST |
- Lazypay
Users of Lazypay BNPL who default on repayment are charged with penalty as per the fee structure given below:
| Payments | Late charges |
| Dues of Rs. 199 – | No late fee |
| Dues from Rs. 199 to Rs. 499 | Rs. 50 |
| Dues from Rs. 500 to Rs. 1,999 | Rs. 100 |
| Dues from Rs. 2000 to Rs. 4,999 | Rs. 150 |
| Dues from Rs. 5000 to Rs. 9,999 | Rs. 300 |
| Dues from Rs. 10,000 to Rs. 24,999 | Rs. 400 |
| Dues more than Rs. 25,000 | Rs. 500 |
- Flipkart PayLater
Flipkart PayLater BNPL charges a penalty for payment defaults. These charges are based on the outstanding amount as of the 5th of every month. Here are the details:
| Bill Amount | Late Payment Charge Amount |
| Rs. 100 – Rs. 500 | Rs. 60 |
| Rs. 501 – Rs. 1000 | Rs. 125 |
| Rs. 1001 – Rs. 2000 | Rs. 175 |
| Rs. 2001 – Rs. 4000 | Rs. 300 |
| Rs. 4001 – Rs. 5000 | Rs. 410 |
| Rs. 5000 & above | Rs. 600 |
- Paytm Postpaid
Here are the details of charges levied by Paytm Postpaid for default on BNPL payments:
| Outstanding Amount | Late Fees (per month) |
| Up to Rs. 100 | Rs. 0 |
| Rs. 101 to Rs. 250 | Rs. 10 |
| Rs. 251 to Rs. 500 | Rs. 25 |
| Rs. 501 to Rs. 1000 | Rs. 50 |
| Rs. 1001 to Rs. 2000 | Rs. 100 |
| Rs. 2001 to Rs. 5000 | Rs. 250 |
- Slice
Slice applies late fees on pending payments after the 4th day of the instalment due date. The default charges levied are Rs. 35 per day during the period when the default continues. The maximum limit of charges is Rs. 2,000 or 30% of the outstanding dues.
- Ola Money Postpaid
Here is the list of charges levied by Ola Money Postpaid on BNPL payment defaults:
| Due Amount | Late fee (Rs) |
| 0 to 250 | 0 |
| 251 to 500 | 50 |
| 501 to 1000 | 75 |
| 1001 to 2500 | 100 |
| 2501 to 5000 | 250 |
| 5000+ | 500 |
Conclusion
Before opting for BNPL, a borrower must keep in mind that he/she must be able to make timely repayments towards the borrowings through this scheme. Payment default in buy now pay later is treated just like any other loan default. This can have negative consequences including a potential impact on your credit score and lower chances of availing credit in the future apart from hefty charges.
