BNPL: Payment Method vs. Credit Agreement – Which Is It And Can It Be Both?

Buy now pay later (BNPL) is an agreement for the sale of a product where the seller allows the payment to be extended over a specific period of time. These options generally offer interest-free instalments, although fees or interest may apply if payments are missed or delayed.

Historically, in South Africa, BNPL payment terms were common practice in commercial supplier agreements. However, they have more recently entered the retail market, with consumer retailers offering BNPL payment terms in partnership with BNPL providers through embedded finance. Embedded finance is generally understood to mean the incorporation of financial products or services into a non-financial platform, particularly online platforms. These short-term, low-value instalment products have become a preferred payment method for online shoppers who want flexibility without having to complete a credit or in-store card application.