Paylater

Paylater refers to a payment service arrangement, commonly known as buy now, pay later (BNPL), that lets consumers purchase goods or services and delay payment. Most offers allow repayment in a set number of installments or after a brief deferral, sometimes interest-free if paid within a promotional period.

At checkout, a paylater provider finances the merchant's sale and pays the merchant upfront. The consumer repays the provider according to a schedule, which may be interest-free for a short period and then incur interest or fees. Providers may perform a soft credit check. The provider assumes the risk of nonpayment, while the merchant receives payment upfront or shortly after purchase.

BNPL has grown since the 2010s, with major global players such as Klarna, Afterpay, Affirm, Zip, and Sezzle. It is used widely in ecommerce and in some countries is integrated into wallets and merchant apps. Regulation varies by jurisdiction and has begun to tighten in some markets, with policymakers examining consumer protection, disclosure, and licensing requirements.

Terms vary: some offers carry no interest if paid within the installment window; late fees may apply; missed payments can affect eligibility for future BNPL offers, and in some cases may be reported to credit agencies. Eligibility broadly depends on merchant constraints and provider criteria, and terms can differ across products and regions.

Benefits include easier budgeting for consumers and higher conversion for merchants. Drawbacks include debt accumulation, potential late fees, and opaque terms. Critics point to marketing to first-time borrowers, lack of standardized credit checks, and gaps in consumer protection and data privacy.

Regulators in several regions have begun to treat BNPL more like traditional lending, requiring clearer disclosures and licensing. Consumers should compare terms across providers and understand repayment obligations before using paylater services.