Definition
Buy Now Pay Later (BNPL)
Buy Now Pay Later is a short-term financing option at checkout that lets you receive goods immediately and pay later, either in one deferred payment or in instalments.
BNPL splits a purchase into a deferred lump sum or a few interest-free or low-interest instalments, with the credit provided by an NBFC or bank behind the BNPL brand. Approval is usually quick and based on limited data at checkout.
In India, BNPL is regulated as lending: providers must follow RBI's digital lending norms, and credit cannot simply be loaded onto prepaid wallets from credit lines without proper authorisation. Missed payments attract late fees and can be reported to credit bureaus, affecting your score.
Used carefully it offers convenient short-term credit, but stacking multiple BNPL dues can lead to over-borrowing, so treat it like any other loan.
Related terms
- Digital Lending GuidelinesRBI's Digital Lending Guidelines are rules that govern app- and platform-based lending in India to ensure transparency, fair practices and protection of borrowers' data.
- Embedded FinanceEmbedded finance is the integration of financial services — payments, credit, insurance — directly inside non-financial apps and platforms, at the point of need.
- Credit ScoreA credit score is a three-digit number summarising your creditworthiness based on your borrowing and repayment history, used by lenders to decide on loans and interest rates.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.