The 2024 holiday season is upon us, and for many shoppers, that means ticking off gift lists, finding the best deals, and managing holiday budgets. BNPL has proven to be a great way to manage spending in a sustainable way when used appropriately. Its flexibility, ease of use and interest free options make it as much a cash flow tool as it is a credit tool for many users - especially around this time of year. However, there are some aspects of BNPL that consumers need to be wary of as they head into this shopping season.
Lack of Transparency Across Providers
Around 360 million consumers globally have used BNPL, including 100 million U.S. adults and roughly half of the UK adult population. Many of these consumers rely on multiple BNPL providers and will likely do so during this shopping season.
However each BNPL provider operates independently. Providers cannot see a consumer’s total spending across other BNPL services, which means they cannot fully mitigate the risk of a consumer overspending. This lack of transparency makes it easy for consumers to take on more debt than they can comfortably repay.
One of the key features of BNPL is its ease of use. However, this great user experience, combined with the lack of visibility among BNPL providers, can tempt shoppers to spend beyond their means. Without keeping track, the holiday cheer could quickly turn into financial stress come January.
And speaking of January, managing multiple repayment schedules across multiple providers—each with differing late fees and penalties—can add unnecessary complications to the new year.
Tips and Tricks for Smart BNPL Use This Holiday Season
To enjoy the benefits of BNPL without the pitfalls, follow these tips:
Stick to a Budget: Plan purchases in advance and use BNPL only for items that can be repaid on time.
Track Payments: Use tools or reminders to monitor repayment schedules across providers, to never miss a due date.
Read the Fine Print: Take time to understand repayment terms, fees, and penalties before committing to a BNPL plan.
Know Your Limits: Since BNPL providers lack visibility into a consumer’s overall obligations, it’s up to the individual to self-regulate and avoid taking on too much.
The Future of Responsible BNPL Use
Thankfully, this holiday season will be the last that consumers in many markets face pitfalls associated with the lack of transparency and the risks of overspending.
Qlarifi is solving these challenges by providing real-time visibility across BNPL transactions. This innovation ensures that both consumers and providers can make more informed decisions, leading to a safer and more responsible BNPL experience.
With tools like Qlarifi going live across multiple markets over the next 12 months and some smart planning, consumers across the globe can make the most of BNPL this holiday season while protecting their financial health.
Happy (responsible) shopping!
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