How do buy now pay later options help the business at all?

Question

I mean cmon, you’re literally delaying payment for a long time. How does that benefit any business?

In: 29

Answer 1

I’m assuming you are talking about online financing companies like Klarna. I’ve only used that one, and I think I know how their business model works but I could be wrong, correct me if so.

Simplified: Customer enters shop with GigaChad friend, Customer sees a shiny watch for 200$ [more simple of a number] but doesn’t have all the money for it, but GigaChad does. So GigaChad says “Heya man I’ll buy the watch up front for ya, just pay me 50$ every two weeks on this day til it’s paid off, no interest.” That’s basically how a lot of these small scale financing companies work to my understanding, they are basically buying the item for you, then you pay them back.

I got my RTX 2060 this way so I’ll use that as an example; I was shopping for MSRP or close GPUs on the used market. I look on Amazon cause gems can still be found used there too. I find it, ahoy and all that jazz. 348$ is the total cost of the GPU. So on Klarna, I make a ‘one time card’ [which tells Klarna how much you will owe them if the entire card is used.] for 348$, not a dollar more not a dollar less. Klarna then pays the entire cost of my GPU, so it starts shipping just the same as normally buying it. Instead of getting charged 348$ that day I was only charged 94$ the next day, then charged 94$ two weeks from that day. You make four payments and boom, paid off.

The primary reason they are blowing up is it allows broke people [like myself] to stretch out expensive payments with no interest which is often far more comfortable to do and less stressful than dropping hundreds of dollars in one day.

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Edit: I was only providing info about how one of those systems work. I don’t know if OP means the actual store, for example BestBuy themselves is doing a get now pay later sort of system or a business where that’s what they do, like the one I discussed. [If so they charge interest, that’s how they make money, more than the price of the item.] as they didn’t specify really. Downvotes don’t correct me.