Buy Now Pay Later

Have you decided to buy a product online and been offered the option to pay in instalments using a quick and simple process? You're probably being offered a Buy Now Pay Later (BNPL) service - a payment method that is increasingly common, especially on e-commerce platforms. BNPL has its advantages, but it also comes with risks. Knowing how it works can help you use it wisely.

What is Buy Now Pay Later

BNPL is a form of short-term credit typically offered for low-value purchases of goods or services. When you use BNPL, you receive the product or service straight away, but only pay part of the price at the time of purchase. The rest is paid in small instalments over time, charged to the bank account or card you provided at checkout. In most cases, the number and amount of instalments are fixed - usually three or four monthly payments. Sometimes you may be able to choose a repayment plan from a few available options.

BNPL plans often come with no interest, making them appear even more appealing. However, terms and conditions vary across providers: some may charge interest for longer repayment periods or apply fees if you miss a payment.

How does it work?

In the most common BNPL model, the service is provided by a third party, such as a bank or financial intermediary. They pay the full amount of your purchase upfront and often receive a commission from the seller in return. This arrangement benefits the retailer, who can increase sales by offering instalments, while you delay part of the payment by a few months.

Access to BNPL is usually quick and easy. Your application is assessed in a matter of seconds, often approved instantly with minimal checks - especially since the service is generally available only for small purchases. BNPL providers do not always assess your creditworthiness, and when they do, the checks are often simplified.

Benefits of BNPL

Although small instalments and no interest may seem attractive, BNPL can expose you to several important risks:

• affordability: you can buy what you need even if you don't have the full amount upfront. This flexibility can be particularly useful for young people or those on a tight budget;
• convenience: using BNPL is straightforward, especially online, and requires just a few clicks. There are no lengthy credit applications, making it easier to access the goods and services you want;
• no interest (often): many BNPL plans are interest-free, making them cheaper than traditional credit cards or personal loans.

Risks to be aware of

Le rate di importo contenuto e l'eventuale assenza di interessi possono essere attraenti, ma il BNPL ti espone ad alcuni rischi che devi tenere in conto:

• over-indebtedness: you may be tempted to make multiple purchases. Even if each repayment is small, the total can add up and become unaffordable;
• late payment fees: if you miss a payment, you could face penalties or interest charges, which may be high. These charges are set out in the service's Terms and Conditions. Repeated late payments can also harm your credit rating, making it harder to get credit in the future.

Your rights and protections

If the BNPL service is offered by a bank or financial intermediary, you are protected by banking transparency rules. These require the lender to give you clear, accurate, and complete information so that you can understand the product, its costs, and your rights - including the right to withdraw from the contract.

If you run into problems, you have the right to file a complaint with the BNPL provider. If you're not satisfied with their response, you can submit a report to the Banca d'Italia, and take the case to the Financial Banking and Financial Ombudsman (ABF), which offers a faster, simpler and less costly alternative to going to court.

If the BNPL loan is €200 or more and includes fees or charges, the provider must also give you the standard pre-contractual information documents required under EU consumer credit legislation. Finally, if the seller does not deliver the product or service you paid for, you have the right to request a refund of the amounts you have already paid.