If you ever see the abbreviation BNPL, it means Buy Now, Pay Later. This concept has existed for quite some time. Perhaps you’ve purchased something that way. If not, you probably know others who have used this strategy to get something they wanted.
In this article, we wanted to focus on one particular aspect of the BNPL system. Recently, Big Tech seems more willing to embrace this payment option. Is this a positive or a negative for the buying public? Let’s break down this recent development’s implications.
Before considering whether Big Tech embracing the BNPL system is positive or negative, let’s discuss its advantages and drawbacks. On the negative side, BNPL can lead to individuals and families spending beyond their means. If someone feels like they can pay for something later, they might get reckless with what they’re willing to purchase in the short term.
Eventually, using BNPL can lead you into some debt settlement vs. debt management decisions. If you bought an item for nothing upfront, when the time comes to pay for it, you might be willing to chip in a little money at a time for months or years. When that happens, you’re doubtless paying interest on the item’s original price as well.
In other words, you’ll focus more on managing debt than settling it. That’s potentially problematic. You’ll probably always be in debt if you keep buying items for no money upfront.
The positive aspect of BNPL is that you can enjoy the item immediately instead of waiting till you can pay for it all at once. People who like BNPL cherish the instant gratification that accompanies it.
Now, let’s talk about Big Tech and BNPL.
Big Tech refers to the Tech Giants, sometimes called the Big Four. These are Meta, Apple, Alphabet, and Amazon. Sometimes those in the tech industry also include Microsoft and call it the Big Five.
Big Tech creates many items that are desirable to the general public, such as smartphones, laptops, desktops, etc. It’s difficult to go through modern life without buying something from one of these companies at some point.
The reason why Big Tech is becoming more comfortable with the BNPL option for consumers is much the same reason why any other companies allow it. Big Tech companies know that BNPL is a profitable business model.
Let’s say someone wants to buy a new smartphone or laptop, but they don’t have the cash to pay for it all at once. The Big Tech companies allowing that person to pay no money down under a BNPL structure will likely lead to more profit for that company later.
BNPL functions because of the existence of payment plans. These plans are predicated on you being willing to pay a little money in accumulated interest in addition to the principal you owe.
It’s the same with anything else you buy on a layaway plan. You can enjoy it for now, but later, you’ll need to take months or even years to pay the company back from which you bought it. Also, you can tack on the interest payments that will begin accumulating.
It’s a matter of opinion whether Big Tech embracing BNPL is a positive thing or a negative one. Your opinion on this matter likely hinges on how you feel about payment plans in the first place.
Undeniably, if you buy things for the full price only if you have the money, you’re less likely to get into debt trouble. You should remember that when you see a BNPL option when shopping for something one of the Big Tech companies makes.
You might be able to go home with that phone or laptop today, but consider the payments and interest that you’ll have to deal with later.