Implications of the new ‘buy now, pay later’ rule for small businesses providing the service

Spreading Out Payments: The Risks and Benefits of Buy Now, Pay Later for Small Businesses

“Buy now, pay later” services have gained popularity among shoppers seeking to spread out their payments for purchases over time. These payment plans, often promoted as zero-interest or low-interest, are an attractive choice for many consumers. Third-party companies like Affirm and Klarna offer these services to shoppers, but this convenience comes with some risks for small businesses.

Small businesses can benefit from offering a “buy now, pay later” option to customers, but there are potential problems that can arise. If something goes wrong with a payment plan, consumers may blame the small business even if they were not directly involved in the process. A report from the Consumer Financial Protection Bureau (CFPB) found that more than 13% of “buy now, pay later” transactions involved a disputed charge or return in 2022, totaling $1.8 billion in transactions at five large BNPL firms.

The CFPB has implemented a new rule that aims to provide small business owners with peace of mind. The agency requires “buy now, pay later” companies to offer consumers the same legal rights and protections as credit card lenders, ensuring that consumers have the ability to dispute charges easily obtain refunds for returned items and receive billing statements for transparency and accountability. Despite the costs associated with these payment plans – typically in the form of a 1% to 3% fee – this rule provides small businesses with an opportunity to protect their reputation and profit margins.

Leave a Reply

Live Coverage of Pakistan vs Canada: ICC T20 World Cup 2024 – Score Updates, Commentary, Video Highlights & News Previous post Johnson and Johnson struggles in ODI match, ends innings with 50 runs and three wickets
Encompass Health nurses and supply chain professionals collaborate to deliver top-notch patient care Next post Encompass Health: Bridging the Gap between Clinical Teams and Supply Chain for Quality Patient Care